The next two questions are based on the following information: Herald company, a jacket selling company, prepares its master budget for the year 2020 on a quarterly basis. The budget officer has gathered the following data: 1 Estimated Sales for each quarter is $230,000. All sales are on credit and all sales are collected in the following quarter. 2 Cost of goods sold for each quarter is $100,000. 3 Variable selling and adminstrative expenses for each jacket are 10% sales commission. 4 Fixed selling and adminstrative (S&A) expenses for the year are: 60,000 120,000 40,000 20,000 240,000 Advertising Executive salaries Insurance Depreciation Total fixed S&A expenses 5 The company expects to borrow $80,000 on April, 1, 2020. No principal will be repaid during the year; Interest rate at an annual rate of 10% is due quarterly. 6 The company will declare $3,000 dividend in December 2020, which will be paid in January 2021. 10 How much is the net income for the year 2020? A. $179,000 B. $182,000 C. $188,000 $202,000 E. None of the above D.

The next two questions are based on the following information: Herald company, a jacket selling company, prepares its master budget for the year 2020 on a quarterly basis. The budget officer has gathered the following data: 1 Estimated Sales for each quarter is $230,000. All sales are on credit and all sales are collected in the following quarter. 2 Cost of goods sold for each quarter is $100,000. 3 Variable selling and adminstrative expenses for each jacket are 10% sales commission. 4 Fixed selling and adminstrative (S&A) expenses for the year are: 60,000 120,000 40,000 20,000 240,000 Advertising Executive salaries Insurance Depreciation Total fixed S&A expenses 5 The company expects to borrow $80,000 on April, 1, 2020. No principal will be repaid during the year; Interest rate at an annual rate of 10% is due quarterly. 6 The company will declare $3,000 dividend in December 2020, which will be paid in January 2021. 10 How much is the net income for the year 2020? A. $179,000 B. $182,000 C. $188,000 $202,000 E. None of the above D.

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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