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Citrus Girl Company (CGC) purchases quality citrus produce from local growers and sells the produce via...

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Accounting

Citrus Girl Company (CGC) purchases quality citrus produce fromlocal growers and sells the produce via the Internet across theUnited States. To keep costs down, CGC maintains a warehouse, butno showroom or retail sales outlets. CGC has the followinginformation for the second quarter of the year:

  1. Expected monthly sales for April, May, June, and July are$280,000, $250,000, $370,000, and $150,000, respectively.
  2. Cost of goods sold is 30 percent of expected sales.
  3. CGC’s desired ending inventory is 25 percent of the followingmonth’s cost of goods sold.
  4. Monthly operating expenses are estimated to be:
  • Salaries: $36,000
  • Delivery expense: 5 percent of monthly sales
  • Rent expense on the warehouse: $7,500
  • Utilities: $1,500
  • Insurance: $150
  • Other expenses: $250

Required:

1. Compute the budgeted cost of purchases foreach month in the second quarter.

2. Complete the budgeted income statement foreach month in the second quarter.

Answer & Explanation Solved by verified expert
3.7 Ratings (583 Votes)
1 budgeted cost of purchases for each month in second quarter april may june sale revenue a 280000 250000 370000 less cost of goods sold a30 84000 75000 111000 add inventory at the end 18750 27750    See Answer
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