The Northeast 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:
The income statement for the first quarter of 2016 was as follows:
Instructions
Prepare a budgeted quarterly income statement in tabular form for the first quarter of 2017. (Show computations.)

Question

The Northeast 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:  
The income statement for the first quarter of 2016 was as follows:  
Instructions
Prepare a budgeted quarterly income statement in tabular form for the first quarter of 2017. (Show computations.)

Quizplus · Accepted Answer

The Answer of The Northeast 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:  
The income statement for the first quarter of 2016 was as follows:  
Instructions
Prepare a budgeted quarterly income statement in tabular form for the first quarter of 2017. (Show computations.)