Representatives of the various departments of Go Cycles have assembled the following data. As the business

Representatives of the various departments of Go Cycles have assembled the following data. As the business manager, you must prepare the budgeted income statements for august and September. Sales budget information: Sales in July were $196,000. You forecast that monthly sales will increase 3% in August and 2% in September Inventory, purchases, and cost of goods sold budget information: Go Cycles tries to maintain inventory of $50,000 plus 20% of the sales revenue budgeted for the following month. Monthly purchases average 60% of sales revenue in that same month. Actual inventory on Jul 31 in $90,000. Sales budgeted for October are $220,000.

Operating expense budget information:

a. Monthly salaries amount to $15,000. Sales commissions equal 6% of the sales for that month. Commissions equal 6% of the sales for that month. Combine salaries and commissions into a single figure.

b. Other monthly expenses are: Rent expense: $13,000, paid as incurred Depreciation Expense: $4,000 Insurance Expense: $1,000, expiration of prepaid amount

REQUIREMENTS:

1. Prepare the inventory, purchases, and cost of goods sold budget, and the operating expenses budget for August and September.

2. Prepare Go Cycles' budgeted income statements for August and September. Round all amounts to the nearest $1,000. For example, budgeted August sales are $202,000($196,000 X 1.03) and September sales are $206,000 (202,000 X 1.02). SOLUTION