Question

Panther Corporation appeared to be experiencing a good year. Sales in the first quarter were one-third ahead of last year, and the sales department predicted that this rate would continue throughout the entire year. The controller asked Janet Nomura, a summer accounting intern, to prepare a draft forecast for the year and to analyze the differences from last year's results. She based the forecast on actual results obtained in the first quarter plus the expected costs of production to be completed in the remainder of the year. She worked with various department heads (production, sales, and so on) to get the necessary information. The results of these efforts follow:

PANTHER CORPORATION
Expected Account Balances for December 31, Year 2

Cash$4,800

Accounts receivable320,000

Inventory (January 1, Year 2)192,000

Plant and equipment 520,000

Accumulated depreciation   164,000

Accounts payable 180,000

Notes payable (due within one year) 200,000

Accrued payables 93,000

Common stock 280,000

Retained earnings 432,800

Sales revenue 2,400,000

Other income 36,000

Manufacturing costs

Materials 852,000

Direct labor 872,000

Variable overhead 520,000

Depreciation 20,000

Other fixed overhead 31,000

Marketing

Commissions 80,000

Salaries 64,000

Promotion and advertising 180,000

AdministrativeSalaries 64,000

Travel 10,000

Office costs 36,000

Income taxes —

Dividends 30,000

$4,342,800 $4,342,800

Adjustments for the change in inventory and for income taxes have not been made. the scheduled production for this year is 450,000 units, and planned sales volume is 400,000 units. Sales and production volume was 300,000 units last year. the company uses a full-absorption costing and FIFO inventory system and is subject to a 40 percent income tax rate. The actual income statement for last year follows.

PANTHER CORPORATION
Statement of Income and Retained Earnings
For the Budget Year Ended December 31, Year 1

Revenues

Sales revenue$1,800,000

Other income 60,000 $1,860,000

Expenses

Cost of goods sold

Materials $528,000

Direct labor 540,000

Variable overhead 324,000

Fixed overhead 48,000

$1,440,000

Beginning inventory 192,000

$1,632,000

Ending inventory 192,000 $1,440,000

Selling

Salaries $54,000

Commissions 60,000

Promotion and advertising126,000 240,000

General and administrative

Salaries$56,000

Travel 8,000

Office costs 32,000 96,000

Income taxes 33,600 1,809,600

Operating profit 64,500

Beginning retained earnings 402,400

Subtotal $452,800

Less dividends 20,000

Ending retained earnings $432,800

Required: Prepared a budgeted income statement and balance sheet

Answer 1

Budgeted Income Statement of Panther Corporation for the year ended December 31, Year 2.

PARTICULARS	AMOUNT $	AMOUNT $	AMOUNT   $
Revenue :
Sales Revenue		$24,00,000
Other Income		36,000
Total Revenue			$24,36,000
Expenses:
Cost of Goods manufactured and sold :
Material	8,52,000
Direct Labor	8,72,000
Variable Overhead	5,20,000
Fixed Overhead	51,000
	22,95,000
Beginning Inventory	1,92,000
	24,87,000
Ending Inventory ( 50,000 units) *	2,55,000	22,32,000
Marketing:
Salaries	64,000
Commissions	80,000
Promotions and advertising	1,80,000	3,24,000
Administrative:
Salaries	64,000
Travel	10,000
Office Costs	36,000	1,10,000
Income Tax (Credits)		-92,000	$25,74,000
Operating Loss			-1,38,000
Beginning Retained Earnings			4,32,800
Subtotal			2,94,800
Less : Dividends			-20,000
Ending Retained Earnings			$2,74,800

* NOTE : Ending Inventory = Total Manufacturing Cost / Production x Closing stock

= $22,95,000 / 4,50,000 units x 50,000 units

= $2,55,000.

Budgeted Balance Sheet of Panther Corporation for the year ended December 31, Year 2.

ASSETS
Current Assets :
Cash	$4,800
Accounts receivable	$3,20,000
Inventory	$2,55,000
Income tax receivable (Credits)	$92,000
Total Current Assets		$6,71,800
Fixed Assets :
Plant and Equipment	$5,20,000
Less : Depreciation during the quarter	$1,64,000	$3,56,000
Total Assets		$10,27,800
Liabilities and Stockholder's Equity
Current liabilities :
Accounts payable	$1,80,000
Notes payable	$2,00,000
Accrued Liabilities	$93,000
Total Current Liabilities		$4,73,000
Stockholder's Equity :
Common stock	$2,80,000
Retained earnings	$2,74,000	$5,54,800
Total liabilities and Stockholder's Equity		$10,27,800

_ _ _ x _ _ _

   ALL THE BEST

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