Calgary Industries is preparing a budgeted income statement for 2018.Predicted sales for the year are $730,000 and cost of goods sold is 40% of sales.The expected selling expenses are $81,000 and the expected general and administrative expenses are $90,000,which includes $23,000 of depreciation.The company's income tax rate is 30%.The budgeted net income for 2018 is:
A)$438,000.
B)$186,900.
C)$267,000.
D)$84,700.
E)$80,100.

Question

Quizplus · Accepted Answer

First, calculate the gross profit: $730,000 (sales) - ($730,000 * 40%) = $730,000 - $292,000 = $438,000. Then, subtract the total expenses (selling expenses + general and administrative expenses) from the gross profit: $438,000 - $81,000 (selling expenses) - $90,000 (general and administrative expenses) = $267,000. Finally, calculate the net income after taxes: $267,000 - ($267,000 * 30%) = $267,000 - $80,100 = $186,900.

Calgary Industries Is Preparing a Budgeted Income Statement for 2018