Question - Budgeted Income Statement
Pendleton Company, a merchandising company, is developing its master budget for 2015. The income statement for 2014 is as follows:
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Pendleton Company Income Statement For Year Ending December 31, 2014
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Gross sales
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$2,500,000
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Less: Estimated uncollectible accounts
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(50,000)
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Net sales
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2,450,000
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Cost of goods sold
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(1,375,000)
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Gross profit
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1,075,000
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Operating expenses (including $25,000 depreciation)
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(625,000)
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Net income
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$450,000
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The following are management's goals and forecasts for 2015:
1. Selling prices will increase by 6 percent, and sales volume will increase by 4 percent.
2. The cost of merchandise will increase by 3 percent.
3. All operating expense are fixed and are paid in the month incurred. Price increases for operating expenses will be 10 percent. The company uses straight-line depreciation.
4. The estimated uncollectible are 2 percent of budgeted sales.
Required - Prepare a budgeted functional income statement for 2015.