Reference no: EM133187250

Question 1 - Budgeted Income Statement - ABC Company makes and sells costume jewelry. For the coming year, the company expects sales of $14,300,000 and cost of goods sold of $7,865,000. Advertising is a key part of the business strategy, and total marketing expense for the year is budgeted at $2,574,000. Total administrative expenses are expected to be $572,000. The company has no interest expense. Income taxes are paid at the rate of 40 percent of operating income.

Required - 1. Construct a budgeted income statement for ABC Company for the coming year.

2. What if they had interest payments of $429,000 during the year? What effect would that have on operating income? On income before taxes? On net income? If no effect, select "no impact" and enter "0".

Question 2 - Schedule of Cash Receipts - Max's is an affordable restaurant near campus and several hotels. Max's accepts cash and checks. Checks are deposited immediately. The bank charges $0.70 per check; the amount per check averages $85. "Bad" checks that he cannot collect make up 2 percent of check revenue.

During a typical month, Max's has sales of $47,000. About 80 percent are cash sales. Estimated sales for the next three months are as follows:

April $35,000

May 47,000

June 59,000

Required - Schedule of cash receipts for May and June. Round your intermediate computations and final answers to the nearest whole dollar.