Question

Panther Corporation appeared to be experiencing a good year. Sales in the first quarter were one-third ahead of last year, and the sales department predicted that this rate would continue throughout the entire year. The controller asked Janet Nomura, a summer accounting intern, to prepare a draft forecast for the year and to analyze the differences from last year's results. She based the forecast on actual results obtained in the first quarter plus the expected costs of production to be completed in the remainder of the year. She worked with various department heads (production, sales, and so on) to get the necessary information. The results of these efforts follow:

PANTHER CORPORATION Expected Account Balances for December 31, Year 2
Cash	$	4,800
Accounts receivable		320,000
Inventory (January 1, Year 2)		192,000
Plant and equipment		520,000
Accumulated depreciation				$	164,000
Accounts payable					180,000
Notes payable (due within one year)					200,000
Accrued payables					93,000
Common stock					280,000
Retained earnings					432,800
Sales revenue					2,400,000
Other income					36,000
Manufacturing costs
Materials		852,000
Direct labor		872,000
Variable overhead		520,000
Depreciation		20,000
Other fixed overhead		31,000
Marketing
Commissions		80,000
Salaries		64,000
Promotion and advertising		180,000
Administrative
Salaries		64,000
Travel		10,000
Office costs		36,000
Income taxes		—
Dividends		20,000
	$	3,785,800		$	3,785,800

Adjustments for the change in inventory and for income taxes have not been made. The scheduled production for this year is 450,000 units, and planned sales volume is 400,000 units. Sales and production volume was 300,000 units last year. The company uses a full-absorption costing and FIFO inventory system and is subject to a 40 percent income tax rate. The actual income statement for last year follows:

PANTHER CORPORATION Statement of Income and Retained Earnings For the Budget Year Ended December 31, Year 1
Revenues
Sales revenue				$	1,800,000
Other income					60,000		$	1,860,000
Expenses
Cost of goods sold
Materials	$	528,000
Direct labor		540,000
Variable overhead		324,000
Fixed overhead		48,000
	$	1,440,000
Beginning inventory		192,000
	$	1,632,000
Ending inventory		192,000		$	1,440,000
Selling
Salaries	$	54,000
Commissions		60,000
Promotion and advertising		126,000			240,000
General and administrative
Salaries	$	56,000
Travel		8,000
Office costs		32,000			96,000
Income taxes					33,600			1,809,600
Operating profit								50,400
Beginning retained earnings								402,400
Subtotal							$	452,800
Less dividends								20,000
Ending retained earnings							$	432,800

Required:

Prepared a budgeted income statement and balance sheet. (Do not round intermediate calculations.)

calculations.)

(Enter all the values as positive value.)

Answer 1

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