Question

E8-20 (Algo) Preparing a Merchandise Purchases Budget and a Budgeted Income Statement (LO 8-3h, 8-5] Citrus Girl Company (CGC) purchases quality citrus produce from local growers and sells the produce via t Internet across the United States. To keep costs down, CGC maintains a warehouse, but no showroom or retail sales outlets. CGC has the following information for the second quarter of the year: 1. Expected monthly sales for April, May, June, and July are $300,000, $270,000, $390,000, and $170,000 respectively. 2. Cost of goods sold is 45 percent of expected sales. 3. CGC's desired ending inventory is 35 percent of the following month's cost of goods sold. 4. Monthly operating expenses are estimated to be: • Salaries: $38,000 Delivery expense: 7 percent of monthly sales Rent expense on the warehouse: $8,500 Utilities: $1,700 Insurance: $210 Other expenses: $310 Required: 1. Compute the budgeted cost of purchases for each month in the second quarter. 2. Complete the budgeted income statement for each month in the second quarter. Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 | Required 2

Answer 1

	Citrus Girl Company
	Budgeted Cost of Purchase
	For the month
		Apr-30	May-30	Jun-30	Jul-30
	Budgeted Sales Revenue	300,000	270,000	390,000	170,000
	Cost of Goods Sold (45% of Revenue)	135,000	121,500	175,500	76,500
	Add: Closing Inventory (35% of next month COGS)	42,525	61,425	26,775
	Total	177,525	182,925	202,275
	Less: Opening Inventory	47,250	42,525	61,425
	Budgeted Cost of Purchases	130,275	140,400	140,850
	Citrus Girl Company
	Budgeted Income Statement
	For the month
		Apr-30	May-30	Jun-30
	Budgeted Sales Revenue	300,000	270,000	390,000
	Cost of Goods Sold (45% of Revenue)	135,000	121,500	175,500
	Budgeted Gross Margin	165,000	148,500	214,500
	Budgeted Selling & Admin Expense	69,720	67,620	76,020
	Budgeted Cost of Purchases	95,280	80,880	138,480
	Budgeted Selling & Admin Expense*	Apr-30	May-30	Jun-30
	Salaries	38,000	38,000	38,000
	Delivery Expense (7% of Sales)	21,000	18,900	27,300
	Rent	8,500	8,500	8,500
	Utilities	1,700	1,700	1,700
	Insurance	210	210	210
	Other Expense	310	310	310
		69,720	67,620	76,020