A) Prepare budgeted multiple-step income statements for each month in columnar f
ID: 2479596 • Letter: A
Question
A) Prepare budgeted multiple-step income statements for each month in columnar form. show in statements the details of cost of goods sold
The budget committee of Suppar Company collects the following data for its San Miguel Store in preparing budgeted income statements for May and June 2017.1. Sales for May are expected to be $806,000. 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 month’s cost of goods sold. 4. Operating expenses are estimated to be as follows: Sales salaries $31,600 per month Advertising 6 % of monthly sales Delivery expense 2 % of monthly sales Sales commissions 5 % of monthly sales Rent expense $5,910 per month Depreciation $880 per month Utilities $610 per month Insurance $520 per month 5. Interest expense is $2,000 per month. Income taxes are estimated to be 30% of income before income taxes.
A) Prepare budgeted multiple-step income statements for each month in columnar form. show in statements the details of cost of goods sold
Explanation / Answer
Particulars May June July Sales 8,06,000.00 Sales in June= Sales of May +5% 8,46,300.00 Sales in July= Sales of June +5% 8,88,615.00 Less: Cost of goods sold (75%* Sales) 6,04,500.00 6,34,725.00 6,66,461.25 Gross Profit 2,01,500.00 2,11,575.00 2,22,153.75 Less: Operating Expenses Sales Salaries 31,600.00 31,600.00 31,600.00 Advertising 6% of Sales 48,360.00 50,778.00 53,316.90 Delivery Expense= 2% of Sales 16,120.00 16,926.00 17,772.30 Sales Commissions= 5% of Sales 40,300.00 42,315.00 44,430.75 Rent 5,910.00 5,910.00 5,910.00 Depreciation 880.00 880.00 880.00 Utilities 610.00 610.00 610.00 Insurance 520.00 520.00 520.00 Interest 2,000.00 2,000.00 2,000.00 Profit before tax 55,200.00 60,036.00 65,113.80 Less: Taxes= 30% 16,560.00 18,010.80 19,534.14 Net Profit 38,640.00 42,025.20 45,579.66 Cost of goods sold: 6,04,500.00 Closing Stock= 10% of Cost of goods sold= 60,450.00 For June Cost of goods sold 6,34,725.00 Opening Stock= closing of may 60,450.00 Closing Stock= 10% of Cost of goods sold= 63,472.50 Cost of goods sold= Opening + Purchase- Closing Stock Hence, Purchases= 6,37,747.50 For July Cost of goods sold 6,66,461.25 Opening Stock= closing of may 63,472.50 Closing Stock= 10% of Cost of goods sold= 66,646.13 Cost of goods sold= Opening + Purchase- Closing Stock Hence, Purchases= 6,69,634.88
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