The Northeast Regional Division of Union Corp. has been requested to prepare a quarterly budgeted income statement for 2020. The regional manager expects that sales in the first quarter of 2020 will increase by 10% over the same quarter of the preceding year and will then increase by 5% for each succeeding quarter in 2020. The corporate head office has requested that the regional manager maintain an inventory in dollars equal to 25% of the next quarter's sales. Quarterly purchases average 55% of quarterly sales. Budgeted ending inventory on December 31, 2019 is $176,000. Quarterly salaries are $20,000 plus 5% of sales. All salaries are classified as sales salaries. Other quarterly expenses are estimated to be as follows: Rent expense Depreciation on office equipment Utilities expense Miscellaneous expenses The income statement for the first quarter of 2019 was as follows: Sales $24,000 $12,000 $3,600 2% of sales Income Statement For the Quarter Ended March 31, 2019 Cost of goods sold Gross profit $720,000 396,000 324,000

The Northeast Regional Division of Union Corp. has been requested to prepare a quarterly budgeted income statement for 2020. The regional manager expects that sales in the first quarter of 2020 will increase by 10% over the same quarter of the preceding year and will then increase by 5% for each succeeding quarter in 2020. The corporate head office has requested that the regional manager maintain an inventory in dollars equal to 25% of the next quarter's sales. Quarterly purchases average 55% of quarterly sales. Budgeted ending inventory on December 31, 2019 is $176,000. Quarterly salaries are $20,000 plus 5% of sales. All salaries are classified as sales salaries. Other quarterly expenses are estimated to be as follows: Rent expense Depreciation on office equipment Utilities expense Miscellaneous expenses The income statement for the first quarter of 2019 was as follows: Sales $24,000 $12,000 $3,600 2% of sales Income Statement For the Quarter Ended March 31, 2019 Cost of goods sold Gross profit $720,000 396,000 324,000

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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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.

Question

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Sales salaries
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Depreciation
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Cost of Goods Sold
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Budgeted Income Statement
For the Quarter Ended March 31, 2020
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The Northeast Regional Division of Union Corp. has been requested to prepare a quarterly budgeted income statement for 2020. The
regional manager expects that sales in the first quarter of 2020 will increase by 10% over the same quarter of the preceding year and
will then increase by 5% for each succeeding quarter in 2020.
The corporate head office has requested that the regional manager maintain an inventory in dollars equal to 25% of the next quarter's
sales. Quarterly purchases average 55% of quarterly sales. Budgeted ending inventory on December 31, 2019 is $176,000. Quarterly
salaries are $20,000 plus 5% of sales. All salaries are classified as sales salaries. Other quarterly expenses are estimated to be as
follows:
Rent expense
S
Depreciation on office equipment
Utilities expense
W
Miscellaneous expenses
The income statement for the first quarter of 2019 was as follows:
Xx
*
Sales
Cost of goods sold
Gross profit
3
CIS
Income Statement
For the Quarter Ended March 31, 2019
E
D
C
$
DEA
4
R
$24,000
F
$12,000
$3,600
16
2% of sales
07 dº
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V
T
G
$720,000
396,000
324,000
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