The budget committee of Guzman Company collects the following data for its Westwood Store in preparing budgeted
Question:
The budget committee of Guzman Company collects the following data for its
Westwood Store in preparing budgeted income statements for July and August 2010.
1. Expected sales: July $400,000, August $450,000, September $500,000.
2. Cost of goods sold is expected to be 60% of sales.
3. Company policy is to maintain ending merchandise inventory at 20% of the following month's cost of goods sold.
4. Operating expenses are estimated to be:
5. Income taxes are estimated to be 30% of income from operations.Instructions(a) Prepare the merchandise purchases budget for each month in columnar form.(b) Prepare budgeted income statements for each month in columnar form. Show the details of cost of goods sold in thestatements.
Step by Step Answer:
Accounting Principles
ISBN: 978-0470533475
9th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso