Question

Monette Motors is a chain of car dealerships. Sales in the fourth quarter of last year were $4,100,000. Suppose management projects that its current​ year's quarterly sales will increase by 6​% in quarter​ 1, by another 5​% in quarter​ 2, by another 7% in quarter​ 3, and by another 3%in quarter 4. Management expects cost of goods sold to be 45% of revenues every​ quarter, while operating expenses should be 30% of revenues during each of the first two​ quarters, 25% of revenues during the third​ quarter, and 20%during the fourth quarter.

Requirement: Prepare a budgeted income statement for each of the four quarters and for the entire year.

Prepare the first portion of the budgeted income statement through gross​ profit, then complete the statement. ​(Round the amounts to the nearest whole​ dollar.)

Monette Motors
Budgeted Income Statement
For the Upcoming Year
	Quarter 1	Quarter 2	Quarter 3	Quarter 4	Year
Sales
Less: Cost of goods sold
Gross profit

Less: Operating expenses
Net income

Answer 1

	Quarter 1	Quarter 2	Quarter 3	Quarter 4	Year
Sales	$4,346,000	$4,563,300	$4,882,731	$5,029,213	$18,821,244
Less: Cost of Goods Sold	$1,955,700	$2,053,485	$2,197,229	$2,263,146	$8,469,560
Gross Profits	$2,390,300	$2,509,815	$2,685,502	$2,766,067	$10,351,684
Less: Operating expenses	$1,303,800	$1,368,990	$1,220,683	$1,005,843	$4,899,315
Net Income	$1,086,500	$1,140,825	$1,464,819	$1,760,225	$5,452,369

--Sales calculation

	Quarter 1	Quarter 2	Quarter 3	Quarter 4
Sales	=4100000*1.06	=4346000*1.05	=4563300*1.07	=4882731*1.03