Question

The data shown were obtained from the financial records of Italian Exports, Inc., for March:

Estimated Sales	$590,000
Sales	567,925
Purchases	294,831
Ending Inventory*	10%
Administrative Salaries	50,320
Marketing Expense**	5%
Sales Commissions	2%
Rent Expense	7,300
Depreciation Expense	900
Utilities	2,700
Taxes***	15%

*of next month's sales

**of estimated sales

***of income before taxes

Sales are expected to increase each month by 10%.

Prepare a budgeted income statement. Round your answers to the nearest dollar.

Italian Exports, Inc.
Budgeted Income Statement
For the Month Ending Mar. 31, 2020
Sales	$
Cost of Goods Sold
Beginning Inventory	$
Purchases
Cost of Goods Available for Sale	$
Ending Inventory
Cost of Goods Sold	$
Gross Profit
Operating Expenses
Administrative Salaries	$
Marketing Expenses
Sales Commissions
Rent Expense
Depreciation Expense
Utilities
Total Operating Expenses	$
Income From Operations	$
Income Tax Expense
Net Income	$

Beginning inventory uses the ending inventory percentage and estimated sales to determine the beginning inventory amount. Apply the other percentages as applicable to determine the required amounts as specified.

Answer 1

Italian Exports
Income Statement for the Month Ended March 31, 2020
Sales	$ 567,925
Cost of Goods Sold
Beginning Inventory	$   59,000
Purchases	$ 294,831
Cost of goods available for sale	$ 353,831
Ending Inventory	$   62,472
Cost of Goods sold	$ 291,359
Gross profit	$ 276,566
Operating expenses
Administrative Expense	$   50,320
Marketing Expense	$   29,500
Sales Commission	$   11,359
Rent Expense	$     7,300
Depreciation Expense	$        900
Utilities	$     2,700
Total Expenses	$ 102,079
Income before Tax	$ 174,487
Less: Tax @15%	$   26,173
Net Income	$ 148,314

Calculations: