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		$30,700		per month
Advertising		6	%	of monthly sales
Delivery expense		2	%	of monthly sales
Sales commissions		5	%	of monthly sales
Rent expense		$5,830		per month
Depreciation		$830		per month
Utilities		$700		per month
Insurance		$580		per month

5.

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