Question

8 Not complete Maried out of 100 Pa tio Budgeted Income Statement Pendleton Company, a merchandising company, is developing its master budget for 2015. The income statement for 2014 is as follows: Pendleton Company income Statement For Year Ending December 31, 2014 Gross sales 5750.000 Less: Estimated uncollectible accounts 7.500) Net sales 747.500 Cost of goods sold 1430,000) Gross profit 312.500 Operating expenses including $25.000 depreciation) 200,500) Net income $112.000 The following are management's goals and forecasts for 2015: 1. Selling prices will increase by 6 percent, and sales volume will increase by 4 percent 2. The cost of merchandise will increase by 3 percent 3. All operating expenses are fixed and are paid in the month incurred. Price increases for operating expenses will be 10 percent. The company uses straight line depreciation 4. The estimated uncollectibles are 2 percent of budgeted sales Required Prepare a budgeted functional income statement for 2015 Do not use negative signs with any of your answers Pendleton Company Budgeted Income Statement For the Year Ending December 31, 2015 Less Emated uncollectible accounts Niet sales Cost of goods sold Gross profit Operating expenses oooooo Check

Answer 1

Solution Pendleton Company Budgeted Income Statement For the Year Ending December 31, 2015 Sales ($750,000 x 106% x 104%) Less: Estimated uncollectible accounts Net sales Cost of goods sold ($430,000 x 103% x 104%) Gross profit Operating expenses (WN-1) Net income $826,800 ($16,536) $810,264 ($460,616) $349,648 ($218,050) $131,598 WN-1: Budgeted operating expenses for 2015 Operating expenses for the year 2014 Less: Depreciation Operating expenses excluding depreciation for 2014 Add: Price increase in year 2015 ($175,500 x 10%) Operating expenses excluding depreciation for 2015 Add: Depreciation Operating expenses for the year 2015 $200,500 ($ 25,000) $175,500 $17,550 $ 193,050 $25,000 $218,050