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.

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Requirement

Prepare

Designer Dresses​'

budgeted income statements for May and June. Show cost of goods sold computations.

a.

Sales in April were

$50,000.

You forecast that monthly sales will increase

6​%

in May and an additional

5​%

in June.

b.

Designer Dresses

maintains inventory of

$8,000

plus

10​%

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

$13,300.

Sales budgeted for July are

$60,000.

c.

Monthly salaries amount to

$5,000.

Sales commissions equal

10​%

of sales for that month. Combine salaries and commissions into a single figure.

d.

Other monthly expenses are as​ follows:

	Rent expense. . . . . . . . . . . . .	$2,000, paid as incurred
	Depreciation expense. . . . . .	$200
	Insurance expense. . . . . . . . .	$100, expiration of prepaid amount
	Income tax. . . . . . . . . . . . . . .	20% of operating income

Answer 1