Question

In May 2020, the budget committee of Johnson Stores assembles the following data in preparation of budgeted merchandise purchases for the month of June.

1. Expected sales: June $501,000, July $607, 400

2. Cost of goods sold is expected to be 75% of sales.

3. Desired ending merchandise inventory is 30% of the following (next) month's cost of goods sold.

4. The beginning inventory at June 1 will be the desired amount.

-Compute the budgeted merchandise purchases for June: (Complete a Merchandise Purchase Budget).

Budgeted Cost of Goods Sold:

Add: Desired ending merchandise inventory:

Total materials required:

Less: Beginning merchandise inventory:

Required merchandise purchases:

-Prepare the budgeted multiple-step income statement for June through gross profit:

Sales:

Cost of goods sold:

Gross Profit:

Answer 1

Solutions:

Merchandise Purchase Budget
Budgeted Cost of Goods Sold ($501000*75%)	375750
Add: Desired ending merchandise inventory:($607400*75%*30%)	136665
Total materials required:	512415
Less: Beginning merchandise inventory: ($375750*30%)	112725
Required merchandise purchases:	399690

Merchandise Purchase Budget budgeted multiple-step income statement
Sales:	501000
Cost of goods sold:	375750
Gross Profit:	125250