Question
In: Accounting
Noventis Corporation prepared the following estimates for the four quarters of the current year: First Quarter...
Noventis Corporation prepared the following estimates for the four quarters of the current year:
| First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
|||||||||
| Sales | $ | 1,500,000 | $ | 1,800,000 | $ | 2,100,000 | $ | 2,400,000 | ||||
| Cost of goods sold | 450,000 | 530,000 | 600,000 | 650,000 | ||||||||
| Administrative costs | 350,000 | 205,000 | 210,000 | 220,000 | ||||||||
| Advertising costs | 0 | 180,000 | 0 | 0 | ||||||||
| Executive bonuses | 0 | 0 | 0 | 92,000 | ||||||||
| Provision for bad debts | 0 | 0 | 0 | 72,000 | ||||||||
| Annual maintenance costs | 80,000 | 0 | 0 | 0 | ||||||||
Additional Information
First-quarter administrative costs include the $200,000 annual insurance premium.
Advertising costs paid in the second quarter relate to television advertisements that will be broadcast throughout the entire year.
No special items affect income during the year.
Noventis estimates an effective income tax rate for the year of 40 percent.
A. Assuming that actual results do not vary from the estimates provided, determine the amount of net income to be reported each quarter of the current year.
B. Assume that actual results do not vary from the estimates provided except for that in the third quarter, the estimated annual effective income tax rate is revised downward to 38 percent. Determine the amount of net income to be reported each quarter of the current year.
|
Solutions
Expert Solution
| a) | Second | Third | Fourth | |||||||
| First | Quarter | Quarter | Quarter | |||||||
| Quarter | ||||||||||
| Sales | $ | 15,00,000 | 18,00,000 | 21,00,000 | 24,00,000 | |||||
| Cost of goods sold | 4,50,000 | 5,30,000 | 6,00,000 | 6,50,000 | ||||||
| Administrative costs | 2,00,000 | 2,55,000 | 2,60,000 | 2,70,000 | ||||||
| Advertising costs | 0 | 60,000 | 60000 | 60000 | ||||||
| Net operating income | 8,50,000 | 9,55,000 | 11,80,000 | 14,20,000 | ||||||
| Income tax at 40% | 340000 | 382000 | 472000 | 568000 | ||||||
| Net income | 5,10,000 | 5,73,000 | 7,08,000 | 8,52,000 | ||||||
| b) | Second | Third | Fourth | |||||||
| First | Quarter | Quarter | Quarter | |||||||
| Quarter | ||||||||||
| Sales | $ | 15,00,000 | 18,00,000 | 21,00,000 | 24,00,000 | |||||
| Cost of goods sold | 4,50,000 | 5,30,000 | 6,00,000 | 6,50,000 | ||||||
| Administrative costs | 2,00,000 | 2,55,000 | 2,60,000 | 2,70,000 | ||||||
| Advertising costs | 0 | 60,000 | 60000 | 60000 | ||||||
| Net operating income | 8,50,000 | 9,55,000 | 11,80,000 | 14,20,000 | ||||||
| Income tax at 40%/38% | 340000 | 382000 | 412300 | 539600 | ||||||
| Net income | 5,10,000 | 5,73,000 | 7,67,700 | 8,80,400 | ||||||
| NOTE: | ||||||||||
| Total tax due for the first three quarters = (850000+955000+1180000)*38% = | 1134300 | |||||||||
| Tax accounted during the first 2 quarters = | 722000 | |||||||||
| Tax to be accounted during the thiird quarter | 412300 | |||||||||
ekkarill92 answered 1 year agoRelated Solutions
Noventis Corporation prepared the following estimates for the four quarters of the current year: First Quarter...
Noventis Corporation prepared the following estimates for the
four quarters of the current year:
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Sales
$
1,400,000
$
1,680,000
$
1,960,000
$
2,240,000
Cost of goods sold
444,000
524,000
594,000
644,000
Administrative costs
450,000
255,000
260,000
270,000
Advertising costs
0
140,000
0
0
Executive bonuses
0
0
0
84,000
Provision for bad debts
0
0
0
50,000
Annual maintenance costs
68,000
0
0
0
Additional Information
First-quarter administrative costs include the $190,000...
Noventis Corporation prepared the following estimates for the four quarters of the current year: First Quarter...
Noventis Corporation prepared the following estimates for the
four quarters of the current year: First Quarter Second Quarter
Third Quarter Fourth Quarter Sales $ 1,100,000 $ 1,320,000 $
1,540,000 $ 1,760,000 Cost of goods sold 410,000 490,000 560,000
610,000 Administrative costs 270,000 165,000 170,000 180,000
Advertising costs 0 140,000 0 0 Executive bonuses 0 0 0 60,000
Provision for bad debts 0 0 0 56,000 Annual maintenance costs
64,000 0 0 0 Additional Information • First-quarter administrative
costs include the...
Noventis Corporation prepared the following estimates for the four quarters of the current year: First Quarter...
Noventis Corporation prepared the following estimates for the
four quarters of the current year:
First Quarter Second Quarter Third Quarter Fourth Quarter
Sales $ 1,100,000 $ 1,320,000 $ 1,540,000 $ 1,760,000
Cost of goods sold 410,000 490,000 560,000 610,000
Administrative costs 270,000 165,000 170,000 180,000
Advertising costs 0 140,000 0 0
Executive bonuses 0 0 0 60,000
Provision for bad debts 0 0 0 56,000
Annual maintenance costs 64,000 0 0 0
Additional Information • First-quarter administrative costs
include the...
Noventis Corporation prepared the following estimates for the four quarters of the current year: First Quarter...
Noventis Corporation prepared the following estimates for the
four quarters of the current year:
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Sales
$
1,150,000
$
1,380,000
$
1,610,000
$
1,840,000
Cost of goods sold
415,000
495,000
565,000
615,000
Administrative costs
280,000
170,000
175,000
185,000
Advertising costs
0
160,000
0
0
Executive bonuses
0
0
0
64,000
Provision for bad debts
0
0
0
58,000
Annual maintenance costs
66,000
0
0
0
Additional Information
First-quarter administrative costs include the $130,000...
Noventis Corporation prepared the following estimates for the four quarters of the current year: First Quarter...
Noventis Corporation prepared the following estimates for the
four quarters of the current year:
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Sales
$
1,500,000
$
1,800,000
$
2,100,000
$
2,400,000
Cost of goods sold
450,000
530,000
600,000
650,000
Administrative costs
350,000
205,000
210,000
220,000
Advertising costs
0
180,000
0
0
Executive bonuses
0
0
0
92,000
Provision for bad debts
0
0
0
72,000
Annual maintenance costs
80,000
0
0
0
Additional Information
First-quarter administrative costs include the $200,000...
Noventis Corporation prepared the following estimates for the four quarters of the current year: First Quarter...
Noventis Corporation prepared the following estimates for the
four quarters of the current year:
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Sales
$
1,150,000
$
1,380,000
$
1,610,000
$
1,840,000
Cost of goods sold
415,000
495,000
565,000
615,000
Administrative costs
280,000
170,000
175,000
185,000
Advertising costs
0
160,000
0
0
Executive bonuses
0
0
0
64,000
Provision for bad debts
0
0
0
58,000
Annual maintenance costs
66,000
0
0
0
Additional Information
First-quarter administrative costs include the $130,000...
Noventis Corporation prepared the following estimates for the four quarters of the current year: First Quarter...
Noventis Corporation prepared the following estimates for the
four quarters of the current year:
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Sales
$
1,150,000
$
1,380,000
$
1,610,000
$
1,840,000
Cost of goods sold
415,000
495,000
565,000
615,000
Administrative costs
280,000
170,000
175,000
185,000
Advertising costs
0
160,000
0
0
Executive bonuses
0
0
0
64,000
Provision for bad debts
0
0
0
58,000
Annual maintenance costs
66,000
0
0
0
Additional Information
First-quarter administrative costs include the $130,000...
Noventis Corporation prepared the following estimates for the four quarters of the current year: First Quarter...
Noventis Corporation prepared the following estimates for the
four quarters of the current year:
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Sales
$
1,425,000
$
1,710,000
$
1,995,000
$
2,280,000
Cost of goods sold
446,000
526,000
596,000
646,000
Administrative costs
440,000
250,000
255,000
265,000
Advertising costs
0
120,000
0
0
Executive bonuses
0
0
0
80,000
Provision for bad debts
0
0
0
90,000
Annual maintenance costs
66,000
0
0
0
Additional Information
First-quarter administrative costs include the $180,000...
The following production budget for the four quarters of 2019: Quarter 1 Quarter 2 Quarter 3...
The following production budget for the four quarters of
2019:
Quarter 1
Quarter 2
Quarter 3
Quarter 4
Units
3,000
4,000
5,000
8,000
Each units requires 4 kg of raw materials costing $6 per
kilogram. On December 31, 2018, the ending inventory of raw
materials was 3,000 kg. Management wants to have a raw materials
inventory at the beginning of each quarter equal to 25% of the
current quarter's production requirements in units. The production
budget for the first quarter...
Dallas Corporation prepared the following two income statements: First Quarter Second Quarter Sales Revenue $ 17,000...
Dallas Corporation prepared the following two income
statements:
First Quarter
Second Quarter
Sales Revenue
$
17,000
$
20,400
Cost of Goods Sold
Beginning Inventory
$
3,400
$
4,400
Purchases
7,400
12,400
Goods Available for Sale
10,800
16,800
Ending Inventory
4,400
9,400
Cost of Goods Sold
6,400
7,400
Gross Profit
10,600
13,000
Operating Expenses
5,400
6,400
Income from Operations
$
5,200
$
6,600
During the third quarter, the company’s internal auditors
discovered that the ending inventory for the first quarter...
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