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    Budget Report

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    Prepare merchandise purchase in columnar form:

    The budget committee of Deaeon company collects the following data for its San Miguel Store in preparing budgeted income statements for May and June 2009.
    1) sales for May are expected to be $800,000. Sales in June and July are expected to be 10% higher than the proceeding month.
    2) cost of goods sold is expected to be 75% 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:

    sales salaries $30,000 per month
    advertising 5% of monthly sales
    deilvery expense 3% of monthly sales
    sales commissions 4% of monthly sales
    rent expense 5,000 per month
    depreciation $800 per month
    utilities $600 per month
    insurance $500 per month

    5) Income taxes are estimated to be 30% of income from operations

    a) Prepare the merchandise purchases budget for each month in columnar form
    b) Prepare budgeted income statements for each month in columnar form. Show in the statements the details of cost of goods sold

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    Solution Summary

    A budget report for Deaeon company including merchandise purchase budget and projected income budget