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 $800,000. 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. 4. 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: Sales salaries $28,500 per month Advertising 6 % of monthly sales Delivery expense 2 % of monthly sales Sales commissions 5% of monthly sales Rent expense $5,790 per month Depreciation $910 per month Utilities $640 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. (a) Your answer is correct. Prepare the merchandise purchases budget for each month in columnar form. SUPPAR COMPANY San Miguel Store Merchandise Purchases Budget For the Months of May and June, 2020 May June Budgeted Cost of Goods Sold $ 600000 $ 630000 Add Desired Ending Merchandise Inventory 63000 66150 Total 663000 696150 Less Beginning Merchandise Inventory 60000 i Required Merchandise Purchases $ 603000 $ 63000 i 633150