Problem:
The Moore Distributor Company, Inc., has just received a franchise to distribute dishwashers. The company started business on January 1, 19A, with the following assets:
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Cash
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$45,000
|
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Inventory
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94,000
|
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Warehouse, office, and delivery facilities and equipment
|
80,000
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All facilities and equipment have a useful life of 20 years and no residual value. First-quarter sales are expected to be $360,000 and should be doubled in the second quarter. Third-quarter sales are expected to be $1,080,000. One percent of sales are considered to be uncollectible. The gross profit margin should be 30 percent. Variable selling expenses (except uncollectible accounts) are budgeted at 12 percent of sales and fixed selling expenses at $48,000 per quarter, exclusive of depreciation. Variable administrative expenses are expected to be 3 percent of sales, and fixed administrative expenses should total $34,200 per quarter, exclusive of depreciation. Prepare a budgeted income statement for the second quarter of 19A.