Exercise 21-20 (Part Level Submission)

In May 2017, the budget committee of Grand Stores assembles the following data in preparation of budgeted merchandise purchases for the month of June.

1. Expected sales: June $526,100, July $612,100.

2. Cost of goods sold is expected to be 75% of sales.

3. Desired ending merchandise inventory is 30% of the following (next) month's cost of goods sold.

4. The beginning inventory at June 1 will be the desired amount.

Budgeted cost of goods sold = 526,100 x 75% = 394,575

Add; Desired ending inventory = (612,100 x 75%) x 30% = 137,722.50 = 137,723

Less; Beginning inventory (ending inventory in May) = 394,575 x 30% = 118,372.50 = 118,373

Budgeted purchases = 413,925

Make a budgeted multiple-step income statement for June through gross profit.