Budgeted Income Statement Pendleton Company, a merchandising company, is developing its master budget for 2015. The income statement for 2014 is as follows: Pendleton Company Income Statement For Year Ending December 31, 2014 Gross sales Less uncollectible accounts Collected sales Cost of goods sold Profit before operating expense Operating expenses (including $25.000 depreciation) Income before tax The following are management's goals and forecasts for 2015: 1. Selling prices will increase by 6 percent, and sales volume will increase by 4 percent. 2. The cost of merchandise will increase by 3 percent. 3. All operating expenses are fixed and are paid in the month incurred. Price increases for operating expenses will be 10 percent. The company uses straight-line depreciation. 4. The estimated uncollectibles are 2 percent of budgeted sales. Required Prepare a budgeted functional income statement for 2015. Do not use negative signs with any of your answers. Pendleton Company Budgeted Income Statement For the Year Ending December 31, 2015 $ Sales Less uncollectible accounts Collected sales Cost of goods sold Profit before operating expense Operating expenses Income before tax $2.500.000 50,000 2.450.000 1.375.000 1,075,000 625.000 $450.000 $ 0 0 0 0 0 0 0
Budgeted Income Statement Pendleton Company, a merchandising company, is developing its master budget for 2015. The income statement for 2014 is as follows: Pendleton Company Income Statement For Year Ending December 31, 2014 Gross sales Less uncollectible accounts Collected sales Cost of goods sold Profit before operating expense Operating expenses (including $25.000 depreciation) Income before tax The following are management's goals and forecasts for 2015: 1. Selling prices will increase by 6 percent, and sales volume will increase by 4 percent. 2. The cost of merchandise will increase by 3 percent. 3. All operating expenses are fixed and are paid in the month incurred. Price increases for operating expenses will be 10 percent. The company uses straight-line depreciation. 4. The estimated uncollectibles are 2 percent of budgeted sales. Required Prepare a budgeted functional income statement for 2015. Do not use negative signs with any of your answers. Pendleton Company Budgeted Income Statement For the Year Ending December 31, 2015 $ Sales Less uncollectible accounts Collected sales Cost of goods sold Profit before operating expense Operating expenses Income before tax $2.500.000 50,000 2.450.000 1.375.000 1,075,000 625.000 $450.000 $ 0 0 0 0 0 0 0
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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Transcribed Image Text:Budgeted Income Statement
Pendleton Company, a merchandising company, is developing its master budget for 2015. The income statement for 2014 is as follows:
Pendleton Company
Income Statement
For Year Ending December 31, 2014
Gross sales
Less uncollectible accounts
Collected sales
Cost of goods sold
Profit before operating expense
Operating expenses (including $25,000 depreciation)
Income before tax
The following are management's goals and forecasts for 2015:
1. Selling prices will increase by 6 percent, and sales volume will increase by 4 percent.
2. The cost of merchandise will increase by 3 percent.
3. All operating expenses are fixed and are paid in the month incurred. Price increases for operating expenses will be 10 percent. The company uses straight-line depreciation.
4. The estimated uncollectibles are 2 percent of budgeted sales.
Required
Prepare a budgeted functional income statement for 2015.
Operating expenses
Income before tax
Do not use negative signs with any of your answers.
Pendleton Company
Budgeted Income Statement
For the Year Ending December 31, 2015
Sales
Less uncollectible accounts
Collected sales
Cost of goods sold
Profit before operating expense
$
$2.500.000
50,000
2,450,000
1.375.000
1,075,000
0
0
0
0
625.000
$450,000
0
0
0
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