Question

Calgary Industries is preparing a budgeted income statement for 2018. Predicted sales for the year are $760,000 and cost of goods sold is 40% of sales. The expected selling expenses are $84,000 and the expected general and administrative expenses are $93,000, which includes $26,000 of depreciation. The company's income tax rate is 30%. The budgeted net income for 2018 is:

Answer 1

Answer:

The budgeted net income for 2018 is : $195,300

Explanation:

Prepare the budgeted income statement for 2018 as follows :

Sales                                                         $760,000

Less Cost of Sales ($760,000 × 40%)   ($304,000)

Gross Profit                                               $456,000

Less Expenses :

Selling Expenses                                       ($84,000)

General and administrative                       ($93,000)

Net Income before tax                              $279,000

Income tax expense ($279,000 × 30%)    ($83,700)

Net Income for the year                             $195,300

Conclusion :

The budgeted net income for 2018 is : $195,300