Prepare a budgeted income statement, Financial Accounting

Assignment Help:

The Schrödinger Science Store operates a retail store
in a local shopping mall.The results of operations for the fourth quarter of 2011 are as follows:
Sales $350,000
Less cost of sales 205,000
Gross margin 145,000
Less selling,general,and administrative expenses 45,000
Income before taxes 100,000
Less income taxes 40,000
Net income $ 60,000

Additional information:
1. Sales and cost of sales are expected to increase by 15 percent in each of the next twoquarters.
2. Seventy percent of sales are collected in the quarter of sale,and 25 percent are collected in the quarter following sale.
3. The balance in accounts receivable at the end of 2011 relates to sales in the fourth quarter of 2011.
4. Inventory purchases in the fourth quarter of 2011 are $200,000.
5. The balance in accounts payable at the end of 2011 relates to purchases in the fourth quarter of 2011.
6. Inventory at the end of 2011 is $150,000.The company plans to hold ending inventory equal to 70 percent of subsequent quarter cost of sales.
7. Selling,general,and administrative expenses are expected to increase by $10,000 owing to increases in advertising and salaries.All other expenses in this category are expected to remain constant.
8. Fifty percent of inventory purchases are paid in the quarter of purchase,and 50 percent are paid in the following quarter.All other expenses,including taxes,are paid in the quarter incurred.
9. Selling,general,and administrative expense includes $2,000 of depreciation related to furniture and ?xtures with a book value (net of accumulated depreciation) of $50,000 at the end of 2011.
10. The tax rate is expected to remain at 40 percent.
11. The cash balance at the end of 2011 is $30,000.
12. Common stock at the end of 2011 is $80,000 and retained earnings is $137,500.
13. Asset accounts are cash,accounts receivable,inventory,and furniture and ?xtures.The only liability account is accounts payable.Owner's equity accounts are common stock and retained earnings.

 

Required
a. Prepare a budgeted income statement for the ?rst quarter of 2012.
b. Prepare a cash budget for the ?rst quarter of 2012.
c. Prepare a budgeted balance sheet as of the end of the ?rst quarter of 2012.
d. The company is discussing the possibility of opening a new store late in the ?rst quarter of 2012. A store opening would require cash payments of $50,000.Assuming the company wants a minimum cash balance of $30,000 at the end of the ?rst quarter,can a new store be opened without obtaining additional funds?

 


Related Discussions:- Prepare a budgeted income statement

Retirement benefits and why it is shown in annual report, Retirement benefi...

Retirement benefits 1)      Provident fund and family pension: a.       Contribution to PF and PPF are provided for and payments in respect thereof are made to the relevant

maximize profit, Natural Furniture Company manufactures three outdoor prod...

Natural Furniture Company manufactures three outdoor products, benches, chairs, and tables. Every product must pass by the following departments before it is shipped: sanding, sawi

Quasi-reorganization, Quasi-Reorganization - Type of reorganization in that...

Quasi-Reorganization - Type of reorganization in that, with shareholder approval, management revalue ASSETS and eliminates DEFICIT (increased by asset devaluations if any) by charg

Periodic inventory system, Analyse the limitations of using a periodic inve...

Analyse the limitations of using a periodic inventory system and provide examples to support your view. essay type

Ias 1 rules, IAS 1 rules IAS 1 requires companies to observe the follow...

IAS 1 rules IAS 1 requires companies to observe the following rules in preparing published financial statements: 1) The financial statements should reflect a true and fair v

Off balance sheet financing, Q. Off balance sheet financing? A finance ...

Q. Off balance sheet financing? A finance charter exists when the substance of the lease is that the lessee enjoys substantially all of the risks and rewards of ownership even

Finance, defination of finance accounting

defination of finance accounting

The matching rule is applied ?, The matching rule is applied a. because it ...

The matching rule is applied a. because it is required by the Internal revenue Code b. by expensing certain items immediately and in their entirety c. to help make the bookkeeper's

Interest is deductible on schedule a, Heather & Terry have a mortgage on th...

Heather & Terry have a mortgage on their primary residence of $750,000 and a mortgage on their vacation home of $410,000. In 2013, they incurred $46,400 of mortgage interest expens

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd