The budget committee of Urbina Company has collected the following data for its Westwood Store in preparing budgeted income statements for July and August 2012.
1. Expected sales: July $400,000, August $450,000, September $500,000.
2. The cost of goods sold is expected to be 60% of sales.
3. Ending merchandise inventory is maintained at 20% of the following month's cost of goods sold.
4. Operating expenses are estimated to be as follows:

5. Income taxes are estimated to be 30% of the income from operations.
Instructions
(a) Prepare the merchandise purchases budget, using columns for each month.
(b) Prepare budgeted income statements, using columns for each month. Show details in the statements for the cost of goods sold?

Transcribed Image Text:

Sales salaries Advertising Delivery expense Sales commissions $50,000 per month 4% of monthly sales 2% of monthly sales 3% of monthly sales Rent expense Depreciation Utilities Insurance $3,000 per month $700 per month $500 per month $300 per month