Answer:
<u>Budgeted functional income statement for 2015</u>
Gross sales ($2,000,000 × 1.04 × 1.06) $2,204,800
Less: Estimated uncollectible accounts ($2,204,800 × 2 %) ($44,096)
Net sales $2,160,704
Cost of goods sold (1,100,000 × 1.03) ($1,133,000)
Gross profit $1,027,704
Operating expenses (475,000 × 1.10) ($522,500)
Depreciation ($25,000)
Net income $480,204
Explanation:
Make the adjustments stated on the 2014 Income Statement.
For Operating Expenses, it is wise to first remove the depreciation expense and apply the increment of 10% to reflect Operating Costs for 2015.
Treat Depreciation Expense separately and at the same amount as for 2014, since depreciation is calculated on straight line method.
