The budget committee of Suppar Company collects for the following data for its San Miguel store in preparing budgeted income statement for May and June 2017

1, Sales for May are expected to be $800,000. 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 $35,000 per month

Advertising 6% of monthly sales

Delivery expense 2% of monthly sales

Sales commissions 5% of monthly sales

Rent expense $5,000 per month

Depreciation $800 per month

Utilities $600 per month

Insurance $ 500 per month

5. Interest expense is $2,000 per month. Income taxes are estimated to be 30% of income before income taxes.

Instructions

(a) Prepar for merchandise purchases budget for each month in columnar form

(b) Prepar budgeted multiple step income statement for each month in columnar form show in the statement the details of cost of goods sold