Clipboard Office Supply sales in april: 50,000, sales in may: 51,000, sales in j

Question

Clipboard Office Supply
sales in april: 50,000, sales in may: 51,000, sales in june: 52,200
Clipboard maintains inventory of 9,000 plus 25% 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 13,000. sales budgeted for july are 65,000. monthly salaries amount to 3,000. sales commissions=4% of sales for that month. combine salaries & commissions into a single figure. other monthly expense: rent expense (2,600 paid as incurred), depreciation expense (300), insurance expense (200, expiration of prepaid amount), income tax (20% of operating income).
prepare a budgeted income statement for May.

**tried to calculate it but cant get the right answers. (answer from the book: COGS 16,500, operating income 21,200). detail calculations especially for COGS, thanks! will rate a lifesaver :)

Explanation / Answer

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Sales revenue 51,000 Cost of goods sold: Beginning inventory 13,000 Add: purchases (50% 51,000) 25,500 Cost of available goods 38,500 Less: Ending inventory (9,000 + 25% of 52,200) 22,050 Cost of goods sold: 16,450 Gross profit 34,550 Salaries &commissions (3,000 + 4% of 51,000) 5,040 Rnet expenses 2,600 Depreciation expenses 300 Insurance expense 200 7,840 Net income 26,710 Income tax (20% of net income) 5,342 Operating income 21,368

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