Question

The budget committee of Designer Dresses​, an upscale​ women's clothing​ retailer, has assembled the following data. As the business​ manager, you must prepare the budgeted income statements for May and June.

a.	Sales in April were $40,000. You forecast that monthly sales will increase 10​% in May and an additional 22​% in June.
b.	Designer Dresses maintains inventory of 0$11,000 plus 20​% of the sales revenues budgeted for the following month. Monthly purchases average​ 50% of sales revenue in that same month. Actual inventory on April 30 is $19,800. Sales budgeted for July are $45,000.
c.	Monthly salaries amount to $3,000. Sales commissions equal 55​% of sales for that month. Combine salaries and commissions into a single figure.
d.	Other monthly expenses are as​ follows: Rent expense. . . . . . . . . . . . . $2,600, paid as incurred Depreciation expense. . . . . . $400 Insurance expense. . . . . . . . . $300, expiration of prepaid amount Income tax. . . . . . . . . . . . . . . 20% of operating income

Before completing the budgeted income​ statements, compute the budgeted cost of goods sold for May and June. ​(Round your answers to the nearest whole​ dollar.)

		May	June
	Beginning inventory
	Purchases
	Cost of goods available for sale
	Ending inventory
	Cost of goods sold

Now complete the budgeted income statements for May and June. ​(Round your answers to the nearest whole​ dollar.)

Designer Dresses
Budgeted Income Statements
For the Months Ended May 31 and June 30
	May		June
Sales revenue
Cost of goods sold
Gross profit
Operating expenses:
Salaries and commission expense
Rent expense
Depreciation expense
Insurance expense
Operating income
Income tax expense
Net income (loss)

Answer 1

Answer:

Calculation of cost of goods sold
Particulars	may	june
Beginning inventory	19,800	21,736
add: purchase (44000*50%),(53680*50%)	22,000	26,840
cost of goods available for sale	41,800	48,576
less: ending inventory(11000+20%*53680), (11000+20%*45,000)	-21,736	-20,000
Cost of goods sold	20,064	28,576

Budgeted income statement
Particulars			may	june
sale revenue			44,000	53,680
cost of goods sold			-20,064	-28,576
gross profit (a)			23,936	25,104
operating expenses
salaries & commission(3000+sale*55%)			27,200	32,524
Rent expenses			2,600	2,600
depreciation expenses			400	400
insurance expenses			300	300
Total operating expenses(b)			30,500	35,824
operating income (a)-(b)			-6,564	-10,720
income tax expenses 20%			-1,313	-2,144
net income			-5,251	-8,576