Question

budget for "Next Year" using the"% of Sales" method. Construct a Sales Revenues" for "Next Year" are forecasted to be $1200. Use "Current Liabilities" as the "plug " This Year %of SalesNext Year S 1,000 500 500 200 300 100 200 Sales Revenues Cost of Goods Sold Gross Margin Operating Expenses Eamings Before Interest & Taxes Interest Expense Earnings Before Taxes Income Taxes (at 50%) Net Income S 100 S 950 100 50 S 1,000 Beginning Retained Earnings Net Income Dividends Ending Retained Earnings $ 500 Current Assets Property, Plant&Equipment Total Assets Current Liabilities 200 LT Liabilities 1,400 Total Liabilities Common Stock Retained Earnings1,000 600 1,600 Total Owner's Equity Total Liabilities and Owner's Equity 3,000

Answer 1

		This Year			Next year
Sales Revenues		1,000			1,200
False Pict Cost of Goods sold		500			600
Gross Margin		500			600
Operating expenses		200			240
Eraning before Interest & Taxes		300			360
Interest Expense		100			100
Earning before Taxes		200			260
Income tax (at 50%)		100			130
Net Income		100			130
Beginning Retained earnings		950			1,000
Net Income		100			130
Dividend		50			65
Ending Retained Earnings		1,000			1,065
Current Assets		500			600
Property, Plant and Equipment		2,500			3,000
Total Assets		3,000			3,600
Current Liabilities	200			735
LT Liabilities	1200			1200
Total Liabilities		1,400			1,935
Common Stock	600			600
Retained Earnings	1000			1065
Total Owner's equity		1,600			1,665
Total Liabilities & Owner's equity		3,000			3,600