The budget committee of Urbina Company has collected the following data for its Eastwood Store in preparing
Question:
The budget committee of Urbina Company has collected the following data for its Eastwood Store in preparing budgeted income statements for July and August 2022.
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 a budgeted income statement, using columns for each month. Show details in the statement for the cost of goods sold.
Step by Step Answer:
Managerial Accounting Tools For Business Decision Making
ISBN: 9781119731825
6th Canadian Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Ibrahim M. Aly, Donald E. Kieso