The budget committee of Omaha Office Supply Co. has assembled the following data. As the business manager, you must prepare the budgeted income statements for May and June 2008.

Sales budget information: Sales in April were \(\$ 42,100\). You forecast that monthly sales will increase \(2.0 \%\) in May and \(2.4 \%\) in June.

Inventory, purchases, and cost of goods sold budget information: Omaha maintains inventory of \(\$ 9,000\) plus \(25 \%\) of the sales revenue budgeted for the following month. Monthly purchases average \(50 \%\) of sales revenue in that same month. Actual inventory on April 30 is \(\$ 14,000\). Sales budgeted for July are \(\$ 42,400\).

Operating expense budget information:

a. Monthly salaries amount to \(\$ 4,000\). Sales commissions equal \(4 \%\) 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 of goods sold bud- get, and the operating expenses budget for May and June,

2. Prepare Omaha's budgeted income statements for May and June. Round all amounts to the nearest SI 00. (Round amounts ending in S50 or more upward, and amounts ending in less than S50 downward.) For example, budgeted May sales are S42,900 (542,100 x 1.02), and June sales are S43.900 (S42,900 x 1.024).

Transcribed Image Text:

Rent expense Depreciation expense Insurance expense $3,000, paid as incurred $ 600 S 200, expiration of prepaid amount