Question

In: Accounting

Branson Electronics Company is a small, publicly traded company preparing its first quarter interim report to be mailed to shareholders.

Branson Electronics Company is a small, publicly traded company preparing its first quarter interim report to be mailed to shareholders. The following information for the quarter has been compiled:

Sales revenue $180,000 Cost of goods sold 35,000 Operating expenses: Fixed $59,000 Variable 48,000 107,000

Fixed operating expenses include payments of $50,000 to an advertising firm to promote Branson through various media throughout the year. The income tax rate for Branson’s level of operations in the first quarter is 20%, but management estimates the effective rate for the entire year will be 25%.

Required:

Prepare the income statement to be included in Branson’s first quarter interim report.

Expert Solution

Income Statement of the First Quarter of the Year

Dr Cr

Sales Revenues 180000

Less Cost of Goods Sold (35000)

Gross Profits 145000

Less Variable Overheads 48000

Less Fixed C0st (Admin) 9000

Less Advertising Expenses 50000

Total Expenses (107000)

Income Before Tax 38000

Less Effective Tax

25% 9500

Net Income $28500

Raffay answered 2 years ago

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