Citrus Girl Company (CGC) purchases quality citrus produce from local growers and sells the produce via the 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: Expected monthly sales for April, May, June, and July are $260,000, $230,000, $350,000, and $130,000, respectively.Cost of goods sold is 30 percent of expected sales.CGC’s desired ending inventory is 40 percent of the following month’s cost of goods sold.Monthly operating expenses are estimated to be:Salaries: $34,000Delivery expense: 8 percent of monthly salesRent expense on the warehouse: $6,500Utilities: $1,300Insurance: $240Other expenses: $340 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.

Desired ending inventory for June month = $130,000 * 30% * 40% Desired ending inventory for June…

Answered: 1. Compute the budgeted cost of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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

Expected monthly sales for April, May, June, and July are $260,000, $230,000, $350,000, and $130,000, respectively.
Cost of goods sold is 30 percent of expected sales.
CGC’s desired ending inventory is 40 percent of the following month’s cost of goods sold.
Monthly operating expenses are estimated to be:

Salaries: $34,000
Delivery expense: 8 percent of monthly sales
Rent expense on the warehouse: $6,500
Utilities: $1,300
Insurance: $240
Other expenses: $340

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.

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