Reference no: EM132510769

Blue company has completed all operating budgets other than the income statement for 2020. Selected data from these budgets follow.

Sales: $300,000

Purchases of raw materials: $145,000

Ending inventory of raw materials: $15,000

Direct labour: $40,000

Manufacturing overhead: $73,000, including $3,000, of depreciation expense

Selling and administrative expenses: $36,000, including depreciation expense of $1,000

Interest expense: $1,000

Principal payment on note: $2,000

Dividends declared: $2,000

Income tax rate: 30%.

Balance sheet

December.31.2019

Cash 20,000

Raw materials inventory 10,000

Total current asset 30,000

Equipment 40,000

Accumulated depreciation (4,000)

Total assets 66,000

Accounts payable 5,000

Note payable 22,000

Total liabilities 27,000

Common shares 25,000

Retained earnings 14,000

Total shareholders' equity 39,000

Total liabilities and shareholders' equity 66,000

Assume that the number of units produced equals the number sold. Year-end accounts receivable: 4% of 2020 sales. Year-end accounts payable: 50% of ending inventory of raw materials. Interest, direct labor, manufacturing overhead, and selling and administrative expenses other than depreciation are paid as incurred. Dividends declared and income taxes for 2020 will not be paid until 2021.

Question 1: Calculate budgeted cost of goods sold.

Question 2: Calculate the budgeted multiple-step income statement for the year ending December 31, 2020 for my own own understanding.