In September 2016, the budget committee of Lincoln Company assembles the following data: Expected Sales October $1,800,000 November 1,700,000 December 1,600,000 Cost of goods sold is expected to be 60% of sales. Desired ending merchandise inventory is 20% of the next month's cost of goods sold. The beginning inventory at October 1 will be the desired amount. Instructions Prepare the budgeted income statement for October through gross profit on sales, including a cost of goods sold schedule.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
In September 2016, the budget committee of Lincoln Company assembles the following data:
- Expected Sales
October $1,800,000 November 1,700,000
December 1,600,000
- Cost of goods sold is expected to be 60% of sales.
- Desired ending merchandise inventory is 20% of the next month's cost of goods sold.
- The beginning inventory at October 1 will be the desired amount.
Instructions
Prepare the
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