Question
the budget committee of Henning Ltd collects the following data for its melbourne store in preparing budgeted income statements for may and june 2007.
1) sales for may are expected to be $600,000. sales in june and july are expected to be 10% higher than the preceeding month.
2) cost of goods sold is expected to be 70% of sales.
3)Henning Ltd's policy is to maintain ending merchandise inventory at 25% of the following month's cost of goods sold.
4) have done operating expenses they are fine
5) income taxes are estimated to be 30% of profit from operations.


budgeted purchase budget
beg sales total need end cogs
may 105,000 600,000 495,000 115,500 610,500 420,000
june 115,500 660,000 544,500 127,050 671,550 462,000
july 726,000 508,200







may june july
sales 600,000 660,000 726,000
cogs
open inv 105,000 115,500
purch 430,500 473,550
cogsas 535,500 589,050
cl inv 115,500 127,050
cogsold 420,000 462,000 508,200
gross pro 180,000 198,000
op exp 103,900 111,100

this is my attempt I can not get the two to agree help

morgaine300

Carry sales and COGS through August to get the rest of your July numbers.

I'm not sure what you're trying to get to "agree."

You are mixing up sales price and cost. There is no need to do the COGS equation because you already have those numbers. However, if you want to show it, you have to convert everything to cost, which is 70% of the retail amounts. (I'm not sure where you got your purchase numbers from because they aren't 70%.)