a)
Determine the percentage increase in sales and prepare the pro forma income statement.
a)
Explanation of Solution
The formula to calculate the percentage of increase in sales:
Compute net income:
Excel workings:
Table (1)
Excel spread sheet:
Table (2)
Compute the sales value:
Consider sales as X:
Hence, sales are $1,817,500.
Compute selling and administration expenses:
Hence, the selling and administration expenses are $211,750.
Prepare a pro forma income statement:
Table (3)
Hence, the net income is $333,500.
Compute the percentage of increase in sales:
Hence, the percentage of increase in sales is 13.59%.
b)
Prepare the pro forma income statement and the other ideas to reach the Company T’s goal.
Given information:
Discount rate of 2% on COGS
b)
Explanation of Solution
Compute the COGS:
Excel workings:
Table (4)
Excel spread sheet:
Table (5)
Hence, the COGS are $1,097,600.
Compute the selling and administration expenses:
Consider selling and administration expenses as X:
Hence, selling and administration expenses are $168,900.
Prepare a pro forma income statement:
Excel spreadsheet:
Table (6)
Hence, the net income is $333,500.
The management cuts the selling and administrative expenses by the amount of $21,100 that is
c)
Whether the company can reach the goal of Company T
c)
Explanation of Solution
Compute projected sales:
Hence, the projected sales are $1,840,000.
Compute the projected cost of goods sold:
Hence, the projected cost of goods sold is $1,288,000.
Prepare a pro forma income statement:
Excel spreadsheet:
Table (7)
Hence, the net income is $322,000.
The company cannot reach the goal as the desired profit is less than the actual that is $322,000 is less than the $333,500.
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Chapter 14 Solutions
Survey Of Accounting
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- 52 APPLICATION EXERCISE A manager is preparing a revenue budget for next month. The following is the manager's current month actual oper- ating results. I ACTUAL OPERATING RESULTS CURRENT MONTH Revenue Source Restaurant Lounge Banquet room Total Number of Guests 3,492 388 4,395 Average Sale per Guest $ 20.50 12.00 28.50 $20.21 Create the revenue forecast for next month based on the following assumptions: 49 Sales $ 71,586 6,180 11,058 $88,824 A. Restaurant guest counts will be 3,600 with an average sale per guest of $21.00. 124 B. Lounge guests to be served are estimated at 525 with a 10 percent increase in average sale per guest. C. The banquet room will serve 425 customers and generate $12.750 in sales. NEXT MONTH BUDGET Revenue Source Restaurant Lounge Banquet room Total Number of Guests Review Your Leaming Average Sale per Guest Q A 1. What will be the manager's revenue forecast for next month? 3. What is the overall percentage increase in the revenue forecast when compared to the…arrow_forwardQuestion 1 The marketing department of HASF Corporations has submitted the following sales forecast for the upcoming fiscal year (all sales are on account) Q1 Q2 Q3 Q4 total Budgeted units sales ? 10% increase 10 % decrease 16,335 62,685 Budget selling price per unit 18 18 18 ? 18 budgeted sales revenue ? 297,000 ? 294,030 ? Other information Each quarter ending finished goods inventory is 20% of next month units sold. Next year first quarter beginning inventory is 3,000. Each finished units require 3 grams of raw material that cost Rs 3 per unit. Management desired to end each quarter with an inventory of raw material equal to 15% of the current quarter production needs Beginning inventory of raw material in first quarter 3,000 grams FIND UNIT SALES of Q1 Answer format should be like : 10000 donot USE COMMA's or Currency or UNITs. Answer should be plain…arrow_forwardQuestion ANSWER B ONLY AND CALCULATE TOTAL The management accountant at Miller Merchandising & More, Odail Russell is in the process of preparing the cash budget for the business for the fourth quarter of 2021. It is customary for the business to borrow money during this quarter. Extracts from the sales and purchases budgets are as follows:Month Cash Sales Sales on Account PurchasesAugust $85,000 $640,000 $420,000September 70,000 550,000 550,000October 88,550 600,000 500,000 November 77,160 800,000 600,000December 174,870 500,000 450,000 i) An analysis of the records shows that trade receivables are settled according to the following credit pattern, in accordance with the credit terms 4/30, n90:50%…arrow_forward
- SB Exercise 8-12 through Exercise 8-13 (Algo) [The following information applies to the questions displayed below.] Beech Corporation is a merchandising company that is preparing a master budget for the third quarter of the calendar year. The company's balance sheet as of June 30th is shown below: Assets Cash Accounts receivable Inventory Plant and equipment, net of depreciation Total assets Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings Total liabilities and stockholders' equity Beech Corporation Balance Sheet June 30 Exercise 8-13 (Algo) Schedules of Expected Cash Collections and Disbursements; Income Statement; Balance Sheet [LO8-2, LO8-4, LO8-9, LO8-10] Beech's managers have made the following additional assumptions and estimates: 1. Estimated sales for July, August, September, and October will be $400,000, $420,000, $410,000, and $430,000, respectively. 2. All sales are on credit and all credit sales are collected. Each month's credit sales…arrow_forwardQuestion 2 View Policies Current Attempt in Progress Drew Enterprises reports all its sales on credit, and pays operating costs in the month incurred. Estimated amounts for the months of June through October are: August September October July June $310,000 $330,000 $300,000 $280,000 $260,000 Budgeted sales Budgeted purchases $144,000 $120,000 $128,000 $132,000 $90,000 . Customer amounts on account are collected 60% in the month of sale and 40% in the following month. . Cost of goods sold is 45% of sales. . Drew purchases and pays for merchandise 30% in the month of acquisition and 70% in the following month. How much cash is budgeted to be received during August? $312,000. O $318,000. O $291,000. $180,000. ) hp 19 4 fn + ins prt sc delete home end & 7 6 num backspace lock P home H J K 4 enterarrow_forwardQuestion No. 3 HASF PVT.LTD BUDGETED INCOME STATEMENT FOR 1 QUARTER 1999 FEBRUARY 323,000 168,000 Description Sales Purchases Wages Supplies Utilities Rent JANUARY 285,000 129,000 35,000 26,000 MARCH 221,000 95,000 30,000 37,000 23,000 8,700 12,800 12,000 28,500 20,000 |21,500 7,200 13,600 6,500 15,000 12,000 Insurance Advertising Depreciation Net Profit 12,000 18.000 24.500 20,000 17,000 20,000 3,700 13,000arrow_forward
- Question 1 The management accountant at Miller Merchandising & More, Odail Russell is in the process of preparing the cash budget for the business for the fourth quarter of 2021. It is customary for the business to borrow money during this quarter. Extracts from the sales and purchases budgets are as follows: Month Cash Sales Sales On Account Purchases August $85,000 $640,000 $420,000 September $70,000 $550,000 $550,000 October $88,550 $600,000 $500,000 November $77,160 $800,000 $600,000 December $174,870 $500,000 $450,000 - An analysis of the records shows that trade receivables are settled according to the following credit pattern, in accordance with the credit terms 4/30, n90: 50% in the month of sale 30% in the first month following the sale 20% in the second month following the sale -Expected purchases include monthly cash purchases of 5%. All other purchases are on Accounts payable are settled as follows,…arrow_forwardQuestion 1 The management accountant at Miller Merchandising & More, Odail Russell is in the process of preparing the cash budget for the business for the fourth quarter of 2021. It is customary for the business to borrow money during this quarter. Extracts from the sales and purchases budgets are as follows: Month Cash Sales Sales On Account Purchases August $85,000 $640,000 $420,000 September $70,000 $550,000 $550,000 October $88,550 $600,000 $500,000 November $77,160 $800,000 $600,000 December $174,870 $500,000 $450,000 - An analysis of the records shows that trade receivables are settled according to the following credit pattern, in accordance with the credit terms 4/30, n90: 50% in the month of sale 30% in the first month following the sale 20% in the second month following the sale -Expected purchases include monthly cash purchases of 5%. All other purchases are on Accounts payable are settled as follows,…arrow_forwardQuestion 1 The management accountant at Miller Merchandising & More, Odail Russell is in the process of preparing the cash budget for the business for the fourth quarter of 2021. It is customary for the business to borrow money during this quarter. Extracts from the sales and purchases budgets are as follows: Month Cash Sales Sales On Account Purchases August $85,000 $640,000 $420,000 September $70,000 $550,000 $550,000 October $88,550 $600,000 $500,000 November $77,160 $800,000 $600,000 December $174,870 $500,000 $450,000 - An analysis of the records shows that trade receivables are settled according to the following credit pattern, in accordance with the credit terms 4/30, n90: 50% in the month of sale 30% in the first month following the sale 20% in the second month following the sale -Expected purchases include monthly cash purchases of 5%. All other purchases are on Accounts payable are settled as follows,…arrow_forward
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