Reference no: EM132979027

Prob 1 - Dewitt Co. budgeted its activity for October 2019 from the following information:

Sales are budgeted at P750,000. All sales are credit sales and a provision for doubtful accounts is made monthly at the rate of 2% of sales.

Merchandise inventory was P120,000 at September 30, 2019, and an increase of P10,000 is planned for the month.

All merchandise is marked up to sell at invoice cost plus 50%.

Estimated cash disbursements for selling and administrative expenses for the month are P105,000.

Depreciation for the month is projected at P25,000.

Required: Calculate Dewitt's projected operating income for October 2019.

Prob 2 - Michelle Enterprise reports the year-end information from 2019 as follows:

Sales (100,000 units) P250,000

Less: Cost of Goods Sold 150.000

Gross Profit 100,000

Less: Operating Expenses (including P10,000 depreciation) 60.000

Net Income P40,000

Michelle is developing the 2020 budget. In 2020, the company would like to increase selling prices by 10%, and as a result expects a decrease in sales volume of 5%. Cost of goods sold as a percentage of sales is expected to increase to 62%. Other than depreciation, all operating costs are variable.

Required: Prepare a budgeted Income statement for 2020.