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 $1,120,000. 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 $30,100 per month Advertising 6 % of monthly sales Delivery expense 2 % of monthly sales Sales commissions 5 % of monthly sales Rent expense $5,390 per month Depreciation $900 per month Utilities $660 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.

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 $1,120,000. 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 month's cost of goods sold. 4. Operating expenses are estimated to be as follows: Sales salaries Advertising Delivery expense Sales commissions Rent expense Depreciation Utilities Insurance $30,100 per month 6% of monthly sales 2% of monthly sales 5% of monthly sales $5,390 per month $900 per month $660 per month $510 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. SUPPAR COMPANY San Miguel Store Merchandise Purchases Budget May June $ $