Pendleton Company, a merchandising company, is developing its master budget for 2013. The income statement for 2012 is as follows
Pendleton Company
Income Statement
For year ending December 31, 2012
Gross Sales ------ $750,000
Less estimated uncollectible accounts ---(7,500)
Net Sales --- 742,500
Cost of Goods Sold ---- (430,000)
Gross Profit ----- 312,500
Operating expenses (including $25,000 deprec) ---- (200,500)
Net Income ---- $112,500
The following are management's goals and forecasts for 2013:
1. Selling prices will increase by 8 percent, and sales volume will increase by 5 percent.
2. The cost of merchandise will increase by 4 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 1 percent of budgeted sales.
Required:
Prepare a budgeted functional income statement for 2013