7.9: Budgeted Income Statement
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.
|
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 |
|
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.