This Website Has Been Moved to a New Link


P9-5A The budget committee of Litwin Company

Price: $2.50

The budget committee of Litwin Company collects the following data for its San
Miguel Store in preparing budgeted income statements for May and June 2014.
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 15% of the following
month’s cost of goods sold.

4. Operating expenses are estimated to be:

Sales salaries  $30,000 per month 
Advertising  6% of monthly sales 
Delivery expense  3% 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. 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.

No comments:

Post a Comment