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 $24,000 $12,000 $3,600 2% of sales The income statement for the first quarter of 2019 was as follows: Income Statement For the Quarter Ended March 31, 2019

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 $24,000 $12,000 $3,600 2% of sales The income statement for the first quarter of 2019 was as follows: Income Statement For the Quarter Ended March 31, 2019

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Pat's Mediterranean Restaurant is preparing its budgeted balance sheet for the coming year. The cash…

A: Cash Budget is prepared to analysis the cash transaction or cash flow of business.Non-cash items…

Q: in September 2019, the budget committee of Jason Company assembles the following data: 1. Expected…

A: Lets understand the basics.Management prepare budget in order to estimate future profit and loss…

Q: Emmanuel Macron has the following budgeted business transactions for the month of May 2020:…

A: Budgeted cash position = Starting bank balance + Total cash inflows - Total cash outflows…

Q: Bravo Company is a bookstore that prepares its master budget on a quarterly basis. The following…

A: The objective of this question is to prepare a master budget for Bravo Company for the first…

Q: Alvarez company budgeted unit sales of 205,708 units for January, 2021 and 240,000 units for…

A: Ending inventory on January 31, 2021 = 240,000 x 30% = 72,000 units

Q: Cali Industries prepares budgets to help manage the company. Cali is budgeting for the fiscal year…

A: The budget is prepared ro estimate the requirements for the future period.

Q: The Northeast Regional Division of Union Corp. has been requested to prepare a quarterly budgeted…

A: Budget: A budget is an estimation to determine the income that will be earned and expenses that will…

Q: Kirkland Company com ines its operati months of 2020, the following data are available. 1. Sales:…

A: The variable cost refers to the cost which varies with production in direct proportion while fixed…

Q: In May 2022, the budget committee of Concord Stores assembles the following data in preparation of…

A: Required merchandise purchases = Cost of goods sold - Beginning merchandise inventory + Ending…

Q: Dear Bartleby, I need assistance with part c to prepare a production budget based on the following…

A: In this question, we Prepare a production budget in units, by month and in total, for the second…

Q: Pharoah Company classifies its selling and administrative expense budget into variable and fixed…

A: SELLING & ADMINISTRATIVE EXPENSESSelling and administrative budget is the statement prepared by…

Q: In May 2022, the budget committee of Whispering Winds Stores assembles the following data for…

A: Budget means the expected value of future. Budget will be compared with actual value and variance is…

Q: Bramble Company has completed all of its operating budgets. The sales budget for the year shows…

A: The Income Statement Shows the Profitability of the Company. Income Statement is One of the…

Q: Determine the account receivable balances at March 31, 2022.

A: Clients usually pay 60% of their fee in the month that service is provided, 30% the month after, and…

Q: ABC Co. has been requested to prepare a quarterly budgeted income statement for 2021. The regional…

A: Budgeted statements are prepared based on the estimations of revenue and expenditure to be incurred…

Q: Concord Company classifies its selling and administrative expense budget into variable and fixed…

A: The selling and administrative expenses are the operating expenses of a business. These expenses are…

Q: In May 2022, the budget committee of Concord Stores assembles the following data in preparation of…

A: Income statement is a financial statement that shows profitability, total revenue and total…

Q: McGuire prepares budgets to help manage the company. McGuire is budgeting for the fiscal year ended…

A: The amount of inventory to be purchased is one of the important decisions made by a manager for…

Q: In May 2022, the budget committee of Blue Spruce, Inc. assembles the following data in preparation…

A: Merchandise purchase budget:- This budget is prepared to estimate the cost of purchase for desired…

Q: Atlanta Industries sales budget shows quarterly sales for the next year as follows: Quarter…

A: A production budget outlines the quantity of goods a company plans to manufacture within a specific…

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

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
$24,000
$12,000
$3,600
2% of sales
The income statement for the first quarter of 2019 was as follows:
Income Statement
For the Quarter Ended March 31, 2019

The income statement for the first quarter of 2019 was as follows:
Income Statement
For the Quarter Ended March 31, 2019
Sales
Cost of goods sold
Gross profit
Operating expenses
ales salaries
Rent expense
Depreciation
Utilities
Miscellaneous
Total operating expenses
Net income
$52,000
24,000
12,000
3,600
12,800
$720,000
396,000
324,000
104,400
$219,600
Prepare a budgeted quarterly income statement in tabular form for the first quarter of 2020.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Introduction

VIEW

Step 2: Budgeted Income Statement

VIEW

Step 3: Working Notes

VIEW

Solution

VIEW

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Capstone, Inc. is preparing its budget for the coming year, 2020. The first step is to plan for the first quarter of that coming year. Capstone, Inc. gathered the following information from the managers. Sales Unit sales for November 2019 112500 Unit sales for December 2019 104,000 Expected unit sales for January 2020 116,000 Expected unit sales for February 2020 115,500 Expected unit sales for March 2020 117,000 Expected unit sales for April 2020 135,000 Expected unit sales for May 2020 145,000 Unit selling price $13.00 Capstone, Inc. likes to keep 10% of the next month’s unit sales in ending inventory. All sales are on account. 85% of the Accounts Receivable are collected in the month of sale, and 15% of the Accounts Receivable are collected in the month after sale. Accounts receivable on December 31, 2019,…
ABC Company's actual unit sales in the current year for January, February, and March were 16,500, 13,500, and 19,500 units, respectively. Current year selling price is $20. An analysis of general economic trends and specific initiatives at ABC forecasts increases for the coming budget year: sales volume by 10% and sales price by 5%. Required: Prepare ABC Company's budgeted unit sales and total sales volume for the first quarter of the coming year. Current sales (units) Budgeted volume increase Budgeted sales (units) Budgeted selling price Budgeted total sales January $ 0 % February $ 0 % $ March 0 % $ Total 0 %
Waterway Company prepares monthly cash budgets. Relevant data from operating budgets for 2027 are as follows. January February Sales $460,800 $512,000 Direct materials purchases 153,600 160,000 Direct labor 115,200 128,000 Manufacturing overhead 89,600 96,000 Selling and administrative expenses 101,120 108,800 All sales are on account. Collections are expected to be 50% in the month of sale, 30% in the first month following the sale, and 20% in the second month following the sale. Sixty percent (60%) of direct materials purchases are paid in cash in the month of purchase, and the balance due is paid in the month following the purchase. All other items above are paid in the month incurred except for selling and administrative expenses, which include $1,280 of depreciation per month. Other data: 1. Credit sales: November 2026, $320,000; December 2026, $409,600. 2. Purchases of direct materials: December 2026, $128,000. 3. Other receipts: January-Collection of December 31, 2026, notes…
Windsor Company is preparing its master budget for 2022. Relevant data pertaining to its sales, production, and direct materials budgets are as follows. Sales: Sales for the year are expected to total 1,200,000 units. Quarterly sales are 25%, 25%, 25%, and 25%, respectively. The sales price is expected to be $41 per unit for the first three quarters and $44 per unit beginning in the fourth quarter Sales in the first Quarter of 2023 are expected to be 10% higher than the budgeted sales for the first quarter of 2022 Production: Management desires to maintain the ending finished goods inventories at 20% of the next quarter's budgeted sales volume. Direct materials Each unit requires 2 kg of raw materials at a cost of $10 per kilogram. Management desires to maintain raw materials inventories at 10% of the next quarter's production requirements. Assume the production requirements for the first quarter of 2023 are 410.000 kg. Prepare the Sales Budget by quarter for 2022.
The total budgeted sales of Nana Kay Ltd for October, the first month of the last quarter in 2019 were GHS1,900,000. Sales are expected to increase by GHS100,000 in each month. Cash sales for each month are GHS200,000 and the remaining are credit sales. All the products are sold at a mark up of the cost plus 25 per cent. On average, Nana Kay Ltd collects 60 per cent of the credit sales in the month of sale and 35 per cent in the month following sales. The remainder is uncollectible. Determine the budgeted total cash receipt for each month of the last quarter of 2019 and the expected account receivables at the end of the quarter. (Show all workings clearly)
Waterways Corporation is preparing its budget for the coming year, 2020. The first step is to plan for the first quarter of that coming year. The company has gathered information from its managers in preparation of the budgeting process. Sales Unit sales for November 2019 111,000 Unit sales for December 2019 101,000 Expected unit sales for January 2020 113,000 Expected unit sales for February 2020 113,000 Expected unit sales for March 2020 118,000 Expected unit sales for April 2020 124,000 Expected unit sales for May 2020 137,000 Unit selling price $12 Waterways likes to keep 10% of the next month’s unit sales in ending inventory. All sales are on account. 85% of the Accounts Receivable are collected in the month of sale, and 15% of the Accounts Receivable are collected in the month after sale. Accounts receivable on December 31, 2019, totaled $181,800.Direct MaterialsDirect materials cost 80 cents per pound. Two pounds of direct materials…
BUDGETED INCOME STATEMENT The Out West Division of XYZ has been asked to prepare a quarterly budgeted income statement for 2020. The regional manager expects that sales in the first quarter of 2020 will increase in volume 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 sustain an inventory in pesos equal to 16% of the next quarter’s sales. Quarterly purchases average 45% of quarterly sales. Budgeted ending inventory on December 31, 2019 is P8,000. Quarterly salaries are P7,200 plus 10% of sales. All salaries are classified as sales salaries. Other quarterly expenses are estimated as follows: Rent expense P4,400 Depreciation on office equipment P2,000 Utilities expense P1,800 Miscellaneous expenses 2% of sales The income statement information…
In September 2019, the budget committee of Jason Company assembles the following data: 1. 2 Expected Sales 4. October November December Cost of goods sold is expected to be 60% of sales. 3. Desired ending merchandise inventory is 20% of the next month's cost of goods sold. The beginning inventory at October 1 will be the desired amount. $1,800,000 1,700,000 V 1,600,000 Prepare the budgeted income statement for October through gross profit on sales, including a cost of goods sold schedule. V M JASON COMPANY Budgeted Income Statement For the Month Ended October 31, 2019 $ $
The Midwest Regional Division of Union Corp. has been requested to prepare a quarterly budgeted income statement for 2017. The regional manager expects that sales in the first quarter of 2017 will increase by 10% over the same quarter of the preceding year and will then increase by 5% for each succeeding quarter in 2017. 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, 2016 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 $24,000 Depreciation on office equipment $12,000 Utilities expense…
Delta Manufacturing has budgeted the following unit sales: 2019 April May June July Units 25,000 40,000 60,000 45,000 Of the units budgeted, 40% are sold by the Coastal Division at an average price of $15 per unit and the remainder are sold by the Central Division at an average price of $12 per unit. Prepare separate sales budgets for each division and for the company in total for the second quarter of 2019.
Bravo Company is a bookstore that prepares its master budget on a quarterly basis. The following data has been assembled to assist in preparation of the master budget for the first quarter: As of December 31, 2023 (the end of the prior quarter), the company’s general ledger showed the following account balances: Debit Credit Cash 44,000 Accounts Receivable 184,000 Inventory 60,000 Building & Equipment 404,000 Accumulated Depreciation 144,000 Accounts Payable 93,000 Capital shares 200,000 Retained Earnings 255,000 Totals $ 692,000 $ 692,000 Actual sales for December and budgeted…
Parlex Company combines its operating expenses for budget purposes in a selling and administrative expense budget. For the first 6 months of 2019, the following data are available. . Sales: 20,000 units quarter 1; 22,000 units quarter 2. Variable costs per dollar of sales: sales commissions 5%, delivery expense 2%, and advertising 4%. Fixed costs per quarter: sales salaries $10,000, office salaries $8,000, depreciation $4,200, insurance $1,500, utilities $800, and repairs expense $500. Unit selling price: $20. Instructions: Prepare a selling and administrative expense budget by quarters for the first 6 months of 2019.