Greenhill Company's balance sheet as of December 31, 2013 is provided below:
In anticipation of preparing the company's operating budget for the upcoming period, the company's accountant has gathered the following information:
(a) December 2013 sales were $220,000. Sales are expected to grow at a rate of 8% per month. Half of all sales are for cash and half are on account.
(b) Inventory purchases are expected to total $100,000 during January and the inventory account is expected to have a $28,000 balance at January 31, 2014. All inventory purchases are on account.
(c) Selling and administrative expenses for January, 2014 are budgeted at $60,000 (exclusive of depreciation) plus 10% of sales. Selling and administrative expenses are paid in cash. Depreciation is budgeted at $3,000 for the month.
(d) The notes payable will be paid in January, 2014. The amount due will be $50,500. The $500 represents January's interest expense.
(e) The company expects to purchase a new machine during January, 2014 at a cost of $5,000.
Required:
Prepare a budgeted income statement for the month of January 2014. Use the traditional income statement format and ignore income taxes.

Question

Greenhill Company's balance sheet as of December 31, 2013 is provided below:  
In anticipation of preparing the company's operating budget for the upcoming period, the company's accountant has gathered the following information:
(a) December 2013 sales were $220,000. Sales are expected to grow at a rate of 8% per month. Half of all sales are for cash and half are on account.
(b) Inventory purchases are expected to total $100,000 during January and the inventory account is expected to have a $28,000 balance at January 31, 2014. All inventory purchases are on account.
(c) Selling and administrative expenses for January, 2014 are budgeted at $60,000 (exclusive of depreciation) plus 10% of sales. Selling and administrative expenses are paid in cash. Depreciation is budgeted at $3,000 for the month.
(d) The notes payable will be paid in January, 2014. The amount due will be $50,500. The $500 represents January's interest expense.
(e) The company expects to purchase a new machine during January, 2014 at a cost of $5,000.
Required:
Prepare a budgeted income statement for the month of January 2014. Use the traditional income statement format and ignore income taxes.

Quizplus · Accepted Answer

The Answer of Greenhill Company's balance sheet as of December 31, 2013 is provided below:  
In anticipation of preparing the company's operating budget for the upcoming period, the company's accountant has gathered the following information:
(a) December 2013 sales were $220,000. Sales are expected to grow at a rate of 8% per month. Half of all sales are for cash and half are on account.
(b) Inventory purchases are expected to total $100,000 during January and the inventory account is expected to have a $28,000 balance at January 31, 2014. All inventory purchases are on account.
(c) Selling and administrative expenses for January, 2014 are budgeted at $60,000 (exclusive of depreciation) plus 10% of sales. Selling and administrative expenses are paid in cash. Depreciation is budgeted at $3,000 for the month.
(d) The notes payable will be paid in January, 2014. The amount due will be $50,500. The $500 represents January's interest expense.
(e) The company expects to purchase a new machine during January, 2014 at a cost of $5,000.
Required:
Prepare a budgeted income statement for the month of January 2014. Use the traditional income statement format and ignore income taxes.

Greenhill Company's Balance Sheet as of December 31, 2013 Is