The budget committee of Binders Office Supply has assembled the following data. As the business manager, you must prepare the budgeted income statements for May and June.
a. Sales in April were $42,000. You forecast that monthly sales will increase 12% in May and 3% in June.
b. Binders Office Supply maintains inventory of $8,000 plus 30% 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 $15,000. Sales budgeted for July are $45,000.
c. Monthly salaries amount to $6,000. Sales commissions equal 12% of sales for that month. Combine salaries and commissions into a single figure.
d. Other monthly expenses are as follows:
Rent expense............................................. $2,200, paid as incurred
Depreciation expense................................ $ 300
Insurance expense ..................................... $ 100, expiration of prepaid amount
Income tax................................................ 20% of operating income
Requirement
Prepare Binder’s budgeted income statements for May and June. Show cost of goods sold computations.