The budget committee of Coronado Company collects the following data for its San Miguel Store in preparing
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Question:
The budget committee of Coronado Company collects the following data for its San Miguel Store in preparing budgeted income statements for May and June 2022.
1. | Sales for May are expected to be $880,000. 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 | $28,400 | per month | ||
Advertising | 6 | % | of monthly sales | |
Delivery expense | 2 | % | of monthly sales | |
Sales commissions | 5 | % | of monthly sales | |
Rent expense | $6,020 | per month | ||
Depreciation | $830 | per month | ||
Utilities | $660 | per month | ||
Insurance | $590 | per month |
5. | Interest expense is $2,000 per month. Income taxes are estimated to be 20% of income before income taxes. |
Prepare budgeted multiple-step income statements for each month in columnar form. Show in the statements the details of cost of goods sold.
Related Book For
Accounting Principles
ISBN: 978-1118875056
12th edition
Authors: Jerry Weygandt, Paul Kimmel, Donald Kieso
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