Instructions B

Prepare schedules for(1) expected collections from customers and (2) expected payments for direct materials purchases for January and February. (b) prepare a cash budget purchases for January and February in columnar form. The budget committee of Suppar Company collects the following data for its San store in preparing budgeted income statements for May and June 2017. Sales for May are expected to be $800,000. Sales in June and July are expected to be 5% higher than the preceding month. Cost of goods sold is expected to be 75% of sales. Company policy is to maintain ending merchandise inventory at 10% of the following months cost of goods sold. Operating expenses are estimated to be as follows: Interest expense is $2,000 per month. Income taxes are estimated to be 30% of income before income taxes. (a) Prepare the merchandise purchases budget for each month in columnar form. (b) Prepare budgeted multiple-step income statements for each month in columnar form. Show in the statements the details of cost of goods sold