Calgary Industries is preparing a budgeted income statement for 2018 and has accumulated the following information. 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) $186,900.
B) $267,000.
C) $84,700.
D) $438,000.
E) $80,100.

Question

Quizplus · Accepted Answer

Net income = Sales - Cost of goods sold - Selling expenses - General and administrative expenses - Income tax= $730,000 - (40% x $730,000) - $81,000 - ($90,000 - $23,000) - (30% x ($730,000 - $292,000))= $730,000 - $292,000 - $81,000 - $67,000 - $132,600= $186,900

Calgary Industries Is Preparing a Budgeted Income Statement for 2018