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Greenhill Company's balance sheet as of December 31, Year 1 is provided below: Greenhill Company Balance Sheet December 31, Year 1 Assets Cash Account receivable Inventory Plant and equipment, net of depreciation. Total assets Liabilities and stockholders' equity Accounts payable Notes payable Capital stock, no par Retained earnings Total liabilities and stockholder's equity $ 52,000 57,000 26,700 317,000 $ 452,700 In anticipation of preparing the company's operating budget for the upcoming period, the company's accountant has gathered the following information: $ 47,000 50,850 200,000 154,850 $452,700 a. December Year 1 sales were $390,000. Sales are expected to grow at a rate of 8% per month. Half of all sales are for cash and half are on account. b. Inventory purchases are expected to total $117,000 during January, and the inventory account is expected to have a $36,500 balance at January 31, Year 2. All inventory purchases are on account. c. Selling and administrative expenses for January Year 2 are budgeted at $77,000 (exclusive of depreciation) plus 10% of sales. Selling and administrative expenses are paid in cash. Depreciation is budgeted at $4,700 for the month. d. The notes payable will be paid in January, Year 2. The amount due will be $52,200. The $1,350 represents interest expense for the month of January, Year 2. e. The company expects to purchase a new machine during January Year 2 at a cost of $6,700. Greenhill Company Budgeted Income Statement For the Month Ended January 31, Year 2 Required: Prepare a budgeted income statement for the month of January Year 2. Use the traditional income statement format and ignore income taxes. Operating expenses:

Greenhill Company's balance sheet as of December 31, Year 1 is provided below: Greenhill Company Balance Sheet December 31, Year 1 Assets Cash Account receivable Inventory Plant and equipment, net of depreciation. Total assets Liabilities and stockholders' equity Accounts payable Notes payable Capital stock, no par Retained earnings Total liabilities and stockholder's equity $ 52,000 57,000 26,700 317,000 $ 452,700 In anticipation of preparing the company's operating budget for the upcoming period, the company's accountant has gathered the following information: $ 47,000 50,850 200,000 154,850 $452,700 a. December Year 1 sales were $390,000. Sales are expected to grow at a rate of 8% per month. Half of all sales are for cash and half are on account. b. Inventory purchases are expected to total $117,000 during January, and the inventory account is expected to have a $36,500 balance at January 31, Year 2. All inventory purchases are on account. c. Selling and administrative expenses for January Year 2 are budgeted at $77,000 (exclusive of depreciation) plus 10% of sales. Selling and administrative expenses are paid in cash. Depreciation is budgeted at $4,700 for the month. d. The notes payable will be paid in January, Year 2. The amount due will be $52,200. The $1,350 represents interest expense for the month of January, Year 2. e. The company expects to purchase a new machine during January Year 2 at a cost of $6,700. Greenhill Company Budgeted Income Statement For the Month Ended January 31, Year 2 Required: Prepare a budgeted income statement for the month of January Year 2. Use the traditional income statement format and ignore income taxes. Operating expenses:

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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21 Greenhill Company's balance sheet as of December 31, Year 1 is provided below: Greenhill Company Balance Sheet December 31, Year 1 Assets Cash Account receivable Inventory Plant and equipment, net of depreciation Total assets Liabilities and stockholders' equity Accounts payable Notes payable Capital stock, no par Retained earnings Total liabilities and stockholder's equity $ 52,000 57,000 26,700 317,000 $ 452,700 In anticipation of preparing the company's operating budget for the upcoming period, the company's accountant has gathered the following information: $ 47,000 50,850 200,000 154,850 $ 452,700 a. December Year 1 sales were $390,000. Sales are expected to grow at a rate of 8% per month. Half of all sales are for cash and half are on account. Greenhill Company Budgeted Income Statement For the Month Ended January 31, Year 2 b. Inventory purchases are expected to total $117,000 during January, and the inventory account is expected to have a $36,500 balance at January 31, Year 2. All inventory purchases are on account. c. Selling and administrative expenses for January Year 2 are budgeted at $77,000 (exclusive of depreciation) plus 10% of sales. Selling and administrative expenses are paid in cash. Depreciation is budgeted at $4,700 for the month. d. The notes payable will be paid in January, Year 2. The amount due will be $52,200. The $1,350 represents interest expense for the month of January, Year 2. e. The company expects to purchase a new machine during January Year 2 at a cost of $6,700. Operating expenses: Required: Prepare a budgeted income statement for the month of January Year 2. Use the traditional income statement format and ignore income taxes.
Transcribed Image Text:21 Greenhill Company's balance sheet as of December 31, Year 1 is provided below: Greenhill Company Balance Sheet December 31, Year 1 Assets Cash Account receivable Inventory Plant and equipment, net of depreciation Total assets Liabilities and stockholders' equity Accounts payable Notes payable Capital stock, no par Retained earnings Total liabilities and stockholder's equity $ 52,000 57,000 26,700 317,000 $ 452,700 In anticipation of preparing the company's operating budget for the upcoming period, the company's accountant has gathered the following information: $ 47,000 50,850 200,000 154,850 $ 452,700 a. December Year 1 sales were $390,000. Sales are expected to grow at a rate of 8% per month. Half of all sales are for cash and half are on account. Greenhill Company Budgeted Income Statement For the Month Ended January 31, Year 2 b. Inventory purchases are expected to total $117,000 during January, and the inventory account is expected to have a $36,500 balance at January 31, Year 2. All inventory purchases are on account. c. Selling and administrative expenses for January Year 2 are budgeted at $77,000 (exclusive of depreciation) plus 10% of sales. Selling and administrative expenses are paid in cash. Depreciation is budgeted at $4,700 for the month. d. The notes payable will be paid in January, Year 2. The amount due will be $52,200. The $1,350 represents interest expense for the month of January, Year 2. e. The company expects to purchase a new machine during January Year 2 at a cost of $6,700. Operating expenses: Required: Prepare a budgeted income statement for the month of January Year 2. Use the traditional income statement format and ignore income taxes.
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