Case Corner Shoppe is a local convenience store with the following information:
• October sales were $200,000.
• Sales are projected to go up by 20% in November and another 10% in December 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 2% transaction fee and deposit the net amount (sales price less the transaction fee) in the store's bank account daily.
• Case 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 $5,000 _ 15% of the next month's cost of goods sold. The September 30 inventory was $23,000.
• Expected monthly operating expenses include:
○ Wages of store workers are $8,700 per month
○ Utilities expense of $1,600 in November and $2,200 in December
○ Property tax expense of $2,000 per month
○ Property and liability insurance expense of $1,000 per month
○ Depreciation expense of $6,500 per month
○ Transaction fees, as stated above, are 2% of credit and debit card sales
Requirements
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