Problem 9-5A (Part Level Submission) (Video)

The budget committee of Suppar Company collects the following data for its San Miguel Store in preparing budgeted income statements for May and June 2020.

1.		Sales for May are expected to be $960,000. Sales in June and July are expected to be 5% higher than the preceding month.
2.		Cost of goods sold is expected to be 75% of sales.
3.		Company policy is to maintain ending merchandise inventory at 10% of the following months cost of goods sold.
4.		Operating expenses are estimated to be as follows:

Sales salaries		$28,400		per month
Advertising		6	%	of monthly sales
Delivery expense		2	%	of monthly sales
Sales commissions		5	%	of monthly sales
Rent expense		$5,760		per month
Depreciation		$890		per month
Utilities		$620		per month
Insurance		$510		per month

5.

Interest expense is $2,000 per month. Income taxes are estimated to be 30% of income before income taxes.

(a)

	Your answer is correct.

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.

SUPPAR COMPANY San Miguel Store Merchandise Purchases Budget For the Months of May and June, 2020 V May June Budgeted Cost of Goods Sold 720000 756000 Add Desired Ending Merchandise Inventory 75600 79380 Total 795600 835380 Less V Beginning Merchandise Inventory 72000 75600 Required Merchandise Purchases 723600 759780 Click if you would like to Show Work for this question: Open Show Work SUPPAR COMPANY San Miguel Store Budgeted Income Statement May June > Click if you would like to Show Work for this question: Open Show Work