Reference no: EM133111676
Question - Budgeted Income Statement - Pendleton Company, a merchandising company, is developing its master budget for 2015. The income statement for 2014 is as follows:
Pendleton Company Income Statement For Year Ending December 31, 2014
Gross sales $3,000,000
Less uncollectible accounts 60,000
Collected sales 2,940,000
Cost of goods sold 1,650,000
Profit before operating expense 1,290,000
Operating expenses (including $25,000 depreciation) 750,000
Income before tax $540,000
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 expenses 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 uncollectibles are 2 percent of budgeted sales.
Required - Prepare a budgeted functional income statement for 2015.
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