The budget committee of Suppar Company collects the following data for its San Miguel Store in preparing budgeted income statements for May and June 2017. 1. Sales for May are expected to be $801,000. 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 $31,800 per month Advertising 6 % of monthly sales Delivery expense 2 % of monthly sales Sales commissions 5 % of monthly sales Rent expense $5,510 per month Depreciation $830 per month Utilities $620 per month Insurance $600 per month 5. Interest expense is $2,000 per month. Income taxes are estimated to be 30% of income before income taxes. Prepare the merchandise purchases budget for each month in columnar form Prepare budgeted multiple-step income statements for each month in columnar form. Show in the statements the details of cost of goods sold.

Problem 23-5A The budget committee of Suppar Company collects the following data for its San Miguel Store in preparing budgeted income statements for May and June 2017 1. 2. 3. 4. Sales for May are expected to be $801,000. 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 month's cost of goods sold Operating expenses are estimated to be as follows: $31,800 Sales salaries Advertising Delivery expense Sales commissions Rent expense Depreciation Utilities Insurance per month of monthly sales of monthly sales of monthly sales per month per month per month per month 6 % 2 % 5 % $5,510 $830 $620 $600 5. Interest expense is $2,000 per month. Income taxes are estimated to be 30% of income before income taxes