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7.9: Budgeted Income Statement

  • Page ID
    44249
  • The sales, cost of goods sold, and selling and administrative cost budgets are supporting budgets that are combined to produce a budgeted income statement for the year. The budgeted income statements for both companies follow.

    Souvenir Statues

    Budgeted Income Statement

    Sales

    $600,000

    Cost of goods sold

    -

    162,900

    Gross profit

    =

    $437,100

    Total selling and administrative expenses

    -

    147,100

    Income before taxes

    =

    $290,000

    Income taxes

    -

    58,000

    Net income

    =

    $232,000

    Headgear

    Budgeted Income Statement

    Sales

    $754,000

    Cost of goods sold

    -

    263,540

    Gross profit

    =

    $490,460

    Total selling and administrative expenses

    -

    228,100

    Income before taxes

    =

    $262,360

    Income taxes

    -

    65,590

    Net income

    =

    $196,770

    The operating budgets culminate with the budgeted income statement.

    Additional budgets may be prepared that relate to balance sheet accounts. Financial budgets look at critical aspects of a business that are not directly operational but that impact a company’s ability to pay its obligations. The discussion will be limited to the cash budget and the capital expenditures budget.

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