Question

In September 2019, the budget committee of Jason Company assembles the following data: 1. Expected Sales October $1,800,000 November 1,700,000 December 1,600,000 2. Cost of goods sold is expected to be 60% of sales. 3. Desired ending merchandise inventory is 20% of the next month's cost of goods sold. 4. The beginning inventory at October 1 will be the desired amount. Prepare the budgeted income statement for October through gross profit on sales, including a cost of goods sold schedule.

Answer 1

$1,068,000

Step-by-step explanation:

JASON COMPANY

Budgeted Income StatementFor the Month Ended October 31, 2019

Sales $1,800,000

Cost of goods sold

Inventory, October 1 $216,000

Purchases $1,068,000

Cost of goods available for sale $1,284,000

($1,068,000+$216,000)

Less: Inventory, October 31 $204,000

Cost of goods sold $1,080,000

($1,284,000-$204,000)

Gross profit $720,000

($1,800,000-$1,080,000)

Supporting Computations:

Budgeted cost of goods sold $1,080,000

Desired ending merchandise inventory 204,000

Total $1,284,000

Less: Beginning merchandise inventory ,($216,000)

Budgeted merchandise purchases$1,068,000

October

$1,800,000 × 60% = $1,080,000.

($1,700,000 × 60%) × 20% = $204,000.

$1,080,000 × 20% = $216,000.