The budget committee of Berg Office Supply has assembled the following data. As the

business manager, you must prepare the budgeted income statements for May and June 2011.

Sales in April were $50,000. You forecast that monthly sales will increase 2.0% in May and 2.4% in June.

Clipboard 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 $13,000. Sales budgeted for July are $65,000.

Monthly salaries amount to $3,000. Sales commissions equal 4% of sales for that month. Combine salaries and commissions into a single figure.

Other Monthly expenses are:

Rent Expense $2,600, paid as incurred

Depreciation expense $300

Insurance expense $200, expiration of prepaid amount

Income Tax 20% of operating income

Requirement

1.

Prepare Berg's budgeted income statements for May and June. Show cost of goods sold

computations.

Requirement 1

Before completing the budgeted income statements, calculate the budgeted cost of goods

sold for May and June using the inventory, purchases, and cost of goods sold budget form.

May

June

Beginning inventory

+ Purchases

= Goods available for sale

- Ending inventory

= Cost of goods sold

Now complete the budgeted income statements for May and June.

Berg Office Supply

Budgeted Income Statements

May and June 2011

May

June

Sales revenue

Cost of goods sold

Gross profit

Operating expenses:

Salaries & commission expense

Rent expense

Depreciation expense

Insurance expense

Operating income

Income tax expense

Net income