Slate Corner Shoppe is a local convenience store with the following? information

Question

Slate Corner Shoppe is a local convenience store with the following? information:

October sales were $290,000

Sales are projected to go up by 12?% in November (from the October ?sales) and another 20?% in December ?(from the November ?sales) and then return to the October level in January.

25% of sales are made in? cash, while the remaining 75?% are paid by credit or debit cards. The credit card companies and banks? (debit card? issuers) charge a 5?% transaction? fee, and deposit the net amount? (sales price less the transaction? fee) in the?store's bank account daily.??

Slate Corner? Shoppe's gross profit is 40?% of its sales revenue.???

For the next several? months, the store wants to maintain an ending merchandise inventory equal to $19,000 ?+ 25?% of the next? month's cost of goods sold. The September 30 inventory was $62,500.

Expected monthly operating expenses? include:

Wages of store workers are $9,400 per month

Utilities expense of $1,400 in November and $2,000 in December

Property tax expense of $2,700 per month

Property and liability insurance expense of $600 per month

Depreciation expense of $5,500 per month

Transaction? fees, as stated? above, are 5?% of credit and debit card sales

Prepare the following budgets for November and December

1. Sales Budget

2. Cost of goods sold, inventory, and purchases budget

3. Operating expense budget

4. Budgeted income statement

Prepare the following budgets for November and December

1. Sales Budget

2. Cost of goods sold, inventory, and purchases budget

3. Operating expense budget

4. Budgeted income statement

Explanation / Answer

1.Sales Budget:

In November, Sales = 290,000 *(100+12)% = 324800

In December, Sales = 324800*(100+20)% = 389760

In January, Sales = 290,000

2.Cost of Goods Sold,Inventory,Purchase Budget:

Closing Stock of September = 62500

Therefor, 62500 = 19000 + 25% of COGS of October ------(As per Question)

COGS for October = (62500 -19000)/25% = 174000

COGS for November = Sales of Nov. - GP of Nov. = 324800 - (40% *324800) = 194880

COGS for December = Sales of Dec - GP for Dec. = 379760 - (40%*379760) = 233856

COGS for January = Sales of Jan - GP for Jan. = 290000 - (40%*290000) = 174000

Closing Stock = 19000+(25%* Next month COGS) ---- (Given in Question)

Closing Stock for October = 19000+ (25% *194880) = 67720

Closing Stock for November = 19000+ (25%*233856) =77464

Closing Stock for December = 19000 + (25%* 174000) = 62500

COGS = Opening Inventory + Purchase -Closing Inventory

Purchase of Novenber = COGS - Opening Inventory +Closing Inventory

= 194880 - 67720+77464 = 204624

Purhcase of December = 233856 -77464 +62500 = 218892

3.Operating Expenses Budget:

(Transaction Fees = Particulars month Sales * 75% *5%)

4 Budgeted Income Statement:

November   December Wages of Store 9400 9400 Utilities od Expenses 1400 2000 Property Tax 2700 2700 Property & Liability Insurance 600 600 Depreciation 5500 5500 Transaction Fees 12180 14616   31780 34816

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