Managerial Accounting: E22-38 Lawlor Lawn Service is projecting sales for July

Managerial Accounting
E22-38 Preparing an operating budget
This exercise continues the Lawlor Lawn Service, Inc., situation from Exercise 21-34 of Chapter 21.
Lawlor Lawn Service is projecting sales for July of $100,000. August’s sales will be 8% higher than July’s. September’s sales are expected to be 10% higher than August’s. October’s sales are expected to be 5% higher than September’s. COGS is expected to be 30% of sales. Lawlor desires to keep minimum inventory of $1,000 plus 10% of next month’s COGS. Beginning inventory on June 30 is $11,000. Purchases are paid for in the month of purchase. Operating expenses are estimated to be $10,000 a month for rent, and $750 per month in depreciation.

Requirements
1. Prepare a sales budget for the quarter ended September 30, 2013.
2. Prepare an inventory, purchases, and cost of goods sold budget for the quarter ended September 30, 2013.
3. Prepare an operating expenses budget for the quarter ended September 30, 2013.
4. Prepare a budgeted income statement for the quarter ended September 30, 2013.
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