1) Budgeted Income Statement Pendleton Company, a merchandising company, is deve

Question

1) Budgeted Income Statement

Pendleton Company, a merchandising company, is developing its master budget for 2015. The income statement for 2014 is as follows:

The following are management’s goals and forecasts for 2015:

Required
Prepare a budgeted functional income statement for 2015.

Do not use negative signs with any of your answers.

2) Cash Budget

Wilson's Retail Company is planning a cash budget for the next three months. Estimated sales revenue is as follows:

All sales are on credit; 60 percent is collected during the month of sale, and 40 percent is collected during the next month. Cost of goods sold is 70 percent of sales. Payments for merchandise sold are made in the month following the month of sale. Operating expenses total $40,000 per month and are paid during the month incurred. The cash balance on February 1 is estimated to be $30,000.

Prepare monthly cash budgets for February, March, and April.

Use negative signs only with beginning and ending cash balances, when appropriate. Do not use negative signs with disbursement answers.

Pendleton Company
Income Statement
For Year Ending December 31, 2014 Gross sales $2,000,000 Less: Estimated uncollectible accounts (40,000) Net sales 1,960,000 Cost of goods sold (1,100,000) Gross profit 860,000 Operating expenses (including $25,000 depreciation) (500,000) Net income $360,000

Explanation / Answer

1)

2)

Income statement sales [2000000*(1+.04)*(1.06)] 2204800 Less: Estimated uncollectible accounts [2204800*.02) (44096) Net sales 2160704 cost of goods sold [1100000(1+.03)] (1133000) Gross profit 1027704 Operating expenses [(500000-25000)*(1+.10)]+25000 (547500) Net Income 480204

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