Question

1A)

Gig Harbor Boating is the wholesale distributor of a small recreational catamaran sailboat. Management has prepared the following summary data to use in its annual budgeting process:

Budgeted unit sales		460
Selling price per unit	$	1,950
Cost per unit	$	1,575
Variable selling and administrative expense (per unit)	$	75
Fixed selling and administrative expense (per year)	$	105,000
Interest expense for the year	$	14,000

Required:

Prepare the company’s budgeted income statement for the year.

B)

The management of Mecca Copy, a photocopying center located on University Avenue, has compiled the following data to use in preparing its budgeted balance sheet for next year:

	Ending Balances
Cash		?
Accounts receivable	$	8,100
Supplies inventory	$	3,200
Equipment	$	34,000
Accumulated depreciation	$	16,000
Accounts payable	$	1,800
Common stock	$	5,000
Retained earnings		?

The beginning balance of retained earnings was $28,000, net income is budgeted to be $11,500, and dividends are budgeted to be $4,800.

Required:

Prepare the company’s budgeted balance sheet. (Amounts to be deducted should be indicated by a minus sign.)

Answer 1