Representatives of the various departments of Go Cycles have assembled the following data. As the business manager, you must prepare the budgeted income statements for August and September 2008.

Sales budget information: Sales in July were \(\$ 196,000\). You forecast that monthly sales will increase \(3 \%\) in August and \(2 \%\) in September.

Inventory, purchases, and cost of goods sold budget information: Go Cycles tries to maintain inventory of \(\$ 50,000\) plus \(20 \%\) of the sales revenue budgeted for the following month. Monthly purchases average \(60 \%\) of sales revenue in that same month. Actual inventory on July 31 is \(\$ 90,000\). Sales budgeted for October are \(\$ 220,000\).

Operating expense budget information:

a. Monthly salaries amount to \(\$ 15,000\). Sales commissions equal \(6 \%\) of sales for that month. Combine salaries and commissions into a single figure.

b. Other monthly expenses are

Requirements 

1. Prepare the inventory, purchases, and cost or goods sold budget, and the operating expenses budget for August and September,

2. Prepare Go Cycles' budgeted income statements for August and September. Round all amounts to the nearest \($1,000.\) For example, budgeted August sales are \($202,000\) (\($196,000\) x 1.03) and September sales are \($206,000\) (\($202,000\) X 1.02). 

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Rent expense Depreciation expense Insurance expense $13,000, paid as incurred $ 4,000 $ 1,000, expiration of prepaid amount