Exercise 5-30 (Part Level Submission) (a) Exercise 5-30 (Part Level Submission)
ID: 2475624 • Letter: E
Question
Exercise 5-30 (Part Level Submission)
(a)
Exercise 5-30 (Part Level Submission)
Bill Thomas, Bates & Hill’s controller, has received all the budgets prepared by the various operating units and is ready to compile the pro-forma financial statements for the first quarter. The company’s balance sheet of December 31 is as follows:Cash $ 24,000 Accounts Receivable (net) 23,400 Finished Goods Inventory 19,600 Raw Materials Inventory 3,024 Property, Plant & Equipment 120,000 Accumulated Depreciation (30,000 ) Total Assets $160,024 Accounts Payable $ 7,200 Income Tax Payable 30,104 Common Stock 40,000 Retained Earnings 82,720 Total Liabilities & Owners Equity $160,024 Quarter Budgeted revenue $564,000 Selling and administrative expense 106,560 Interest expense 1,352 Cash 12,310 Cost of Goods Sold 401,348 Accounts receivable 54,600 Direct materials 2,224 Finished goods 23,606 Acounts payable 13,280 Notes payable 16,400
Additional Information:
? Bates & Hill plans to declare and pay dividends totaling $19,600 in January. ? Bates & Hill plans to purchase and pay cash for a piece of land in February at a cost of $28,800. ? Bates & Hill plans to purchase equipment in March at a cost of $24,000. ? Depreciation for manufacturing overhead $12,000 per month and for selling and administrative $4,000 per month.
The company expects a 12% income tax rate, and all quarterly taxes are paid in the first month of the following quarter.
Explanation / Answer
sales revenue 564000 Less:cost of goodssold 401348 Gross margin 162652 less: Selling and administrative expense 106560 Operating income 56092 Non operating income /(loss) Interest expense -1352 Income before tax 54740 Less:Income tax expense [54740*.12 -6568.8 Net income 48171.2