Question

Calgary Industries is preparing a budgeted income statement for 2018 and has accumulated the following information. Predicted sales for the year are $740,000 and cost of goods sold is 40% of sales. The expected selling expenses are $82,000 and the expected general and administrative expenses are $91,000, which includes $24,000 of depreciation. The company's income tax rate is 30%. The budgeted net income for 2018 is:

Answer 1

Answer:

$189,700

Explanation:

The computation of budgeted net income is shown below:-

Calgary Industries

Budgeted Income Statement

(For the year- 2018)

Sales                                      $740,000

Less:- Cost of Goods Sold   $296,000

($740,000 × 40%)

Gross income                        $444,000

Selling Expenses                   $82,000

General & administrative

Expenses (including $24,000

depreciation                             $91,000

Profit from Operations             $271,000

Less:- Income Tax (30%)          $81,300

($271,000 × 30%)

Net income                               $189,700

Therefore the budgeted net income for 2018 is $189,700