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Concept explainers
The budget committee of Suppar Company collects the following data for its San Miguel Store in preparing
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 |
$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) Prepare the merchandise purchases budget for each month in columnar form.
(b) Prepare budgeted multiple-step income statements for each month in columnar form. Show in the statements the details of cost of goods sold.
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Chapter 9 Solutions
Managerial Accounting, Binder Ready Version: Tools for Business Decision Making
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