The budget committee of Ridder Company collects the following data for its Westwood Store in preparing budgeted income statements for July and August 2012:
1. The store expects sales for July to be $450,000, for August, $500,000, and for September, $550,000.
2. It expects the cost of goods sold 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 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 budgeted income statements, using columns for each month. Show details for the cost of goods sold in the statements?

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Sales salaries Advertising Delivery expense Sales commissions $50,000 per month 4% of monthly sales 2% of monthly sales 3% of monthly sales Rent expense Depreciation Utilities Insurance $3,000 per month $700 per month $500 per month $300 per month