The Northeast Regional Division of Bridgeport Corp. has been requested to prepare a quarterly budgeted income statement for 2022. The regional manager expects that sales in the first quarter of 2022 will increase by 10% over the same quarter of the preceding year and will then increase by 5% for each succeeding quarter in 2022. The corporate head office has requested that the regional manager maintain an inventory in dollars equal to 20% of the next quarter's sales. Quarterly purchases average 55% of quarterly sales. Budgeted ending inventory on December 31, 2021 is $177,000. Quarterly salaries are $21,900 plus 5% of sales. All salaries are classified as sales salaries. Other quarterly expenses are estimated to be as follows: Rent expense $24,500 Depreciation on office equipment $12,700 Utilities expense $4,500 Miscellaneous expenses 2% of sales The income statement for the first quarter of 2021 was as follows: Income Statement For the Quarter Ended March 31, 2021 Sales $725,000 Cost of goods sold 397,000 Gross profit 328,000 Operating expenses Sales salaries $54,000 Rent expense 24,500 Depreciation 12,700 Utilities 4,500 Miscellaneous 13,000 Total operating expenses 108,700 Net income $219,300 Prepare a budgeted quarterly income statement in tabular form fo
The Northeast Regional Division of Bridgeport Corp. has been requested to prepare a quarterly budgeted income statement for 2022. The regional manager expects that sales in the first quarter of 2022 will increase by 10% over the same quarter of the preceding year and will then increase by 5% for each succeeding quarter in 2022. The corporate head office has requested that the regional manager maintain an inventory in dollars equal to 20% of the next quarter's sales. Quarterly purchases average 55% of quarterly sales. Budgeted ending inventory on December 31, 2021 is $177,000. Quarterly salaries are $21,900 plus 5% of sales. All salaries are classified as sales salaries. Other quarterly expenses are estimated to be as follows: Rent expense $24,500 Depreciation on office equipment $12,700 Utilities expense $4,500 Miscellaneous expenses 2% of sales The income statement for the first quarter of 2021 was as follows: Income Statement For the Quarter Ended March 31, 2021 Sales $725,000 Cost of goods sold 397,000 Gross profit 328,000 Operating expenses Sales salaries $54,000 Rent expense 24,500 Depreciation 12,700 Utilities 4,500 Miscellaneous 13,000 Total operating expenses 108,700 Net income $219,300 Prepare a budgeted quarterly income statement in tabular form fo
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 Bridgeport Corp. has been requested to prepare a quarterly budgeted income statement for 2022. The regional manager expects that sales in the first quarter of 2022 will increase by 10% over the same quarter of the preceding year and will then increase by 5% for each succeeding quarter in 2022.
The corporate head office has requested that the regional manager maintain an inventory in dollars equal to 20% of the next quarter's sales. Quarterly purchases average 55% of quarterly sales. Budgeted ending inventory on December 31, 2021 is $177,000. Quarterly salaries are $21,900 plus 5% of sales. All salaries are classified as sales salaries. Other quarterly expenses are estimated to be as follows:
The income statement for the first quarter of 2021 was as follows:
Prepare a budgeted quarterly income statement in tabular form for the first quarter of 2022.
The corporate head office has requested that the regional manager maintain an inventory in dollars equal to 20% of the next quarter's sales. Quarterly purchases average 55% of quarterly sales. Budgeted ending inventory on December 31, 2021 is $177,000. Quarterly salaries are $21,900 plus 5% of sales. All salaries are classified as sales salaries. Other quarterly expenses are estimated to be as follows:
| Rent expense | $24,500 | ||
| $12,700 | |||
| Utilities expense | $4,500 | ||
| Miscellaneous expenses | 2% of sales |
The income statement for the first quarter of 2021 was as follows:
|
Income Statement
For the Quarter Ended March 31, 2021 |
|||||||
|---|---|---|---|---|---|---|---|
|
Sales
|
$725,000 | ||||||
|
Cost of goods sold
|
397,000 | ||||||
|
Gross profit
|
328,000 | ||||||
|
Operating expenses
|
|||||||
|
Sales salaries
|
$54,000 | ||||||
|
Rent expense
|
24,500 | ||||||
|
Depreciation
|
12,700 | ||||||
|
Utilities
|
4,500 | ||||||
|
Miscellaneous
|
13,000 | ||||||
|
Total operating expenses
|
108,700 | ||||||
|
Net income
|
$219,300 |
Prepare a budgeted quarterly income statement in tabular form for the first quarter of 2022.
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