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Pink House Ltd. sells plastic pink flamingos. The following operating expenses were provided for the month...

Pink House Ltd. sells plastic pink flamingos. The following operating expenses were provided for the month of April 2020:

Sales salaries $25,000
Advertising 3% of monthly sales
Sales commissions 2.5% of monthly sales
Delivery expenses $2,500
Rent expense $10,500
Amortization $580
Utilities $800
Insurance $1,200
Telephone $600

The company budgets cost of goods sold to be 55% of total sales.
Expected sales for April and May are $850,000 and $925,000, respectively.
The company maintains a merchandise inventory of 20% of the following months cost of goods sold.
The company’s income tax rate is 30%.

Use the excel document found in the Assignments tab to answer the questions below.

  1. Prepare a merchandise purchases budget for April 2020.
  2. Prepare a budgeted income statement for April 2020, showing details for cost of goods sold.
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