Reference no: EM133065126
Question - Kristan Division of KML has been requested to prepare a quarterly budgeted income statement for 2021. The regional manager expects that sales in the first quarter of 2021 will increase in volume by 10% over the same quarter of the preceding year and will then increase by 5% for each succeeding quarter in 2021.
The corporate head office has requested that the regional manager maintain an inventory in pesos equal to 16% of the next quarter's sales. Quarterly purchases average 45% of quarterly sales. Budgeted ending inventory on December 31, 2020, is P8,000. Quarterly salaries are P7,200 plus 10% of sales. All salaries are classified as sales salaries. Other quarterly expenses are estimated to be as follows:
Rent expense P4,400
Depreciation on office equipment P2,000
Utilities expense P1,800
Miscellaneous expenses 2% of sales
The income statement information for the first quarter of 2020 was as follows:
Sales P150,000
Cost of goods sold 66,000
The December 31, 2021, balance sheet accounts include the following balances:
Cash 26,000
Marketable Securities 27,894
Equipment 127,000
Accumulated Depreciation 52,000
Common Stock 68,000
Retained Earnings 21,000.
Accounts receivable at December 31, 2021 are expected to be 8% of annual sales. 20% of the ending inventory is expected to have not yet been paid at December 31, 2021.
Required - Prepare a budgeted quarterly income statement and balance sheet for the first quarter of 2021.
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