E9- Budgeted income statement (Learning Objective 2) 26A Rerkner Motors is a cha

Question

E9- Budgeted income statement (Learning Objective 2) 26A Rerkner Motors is a chain of car dealerships. Sales in the fourth quarter of last year were s3.700,000. Suppose management projects that its current year's quarterly sales will in- crease by another 5% in quarter 4, Management expects cost of goods sold to be 55% of revenues every quarter, while operating expenses should be 35% of revenues during each of the first two quarters, 25% of revenues during the third quarter, and 20% during the fourth quarter. 2% in quarter 1, by another 4% in quarter 2, by another3%in quarter 3, and by Requirement Prepare a budgeted income statement for each of the four quarters and for the entire year.

Explanation / Answer

Budgeted income statement :

Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year Sales 3774000 3924960 4042709 4244844 15986513 Less: Cost of goods sold 2075700 2158728 2223490 2334664 8792582 Gross margin 1698300 1766232 1819219 1910180 7193931 Less:Operating expenses 1320900 1373736 1010677 848969 4554282 Net income 377400 392496 808542 1061211 2639649

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