Question

Brief Exercise 22-08

North Company has completed all of its operating budgets. The sales budget for the year shows 50,720 units and total sales of $2,448,100. The total unit cost of making one unit of sales is $23. Selling and administrative expenses are expected to be $308,900. Interest is estimated to be $10,300. Income taxes are estimated to be $213,300.

Prepare a budgeted multiple-step income statement for the year ending December 31, 2020.

NORTH COMPANY Budgeted Income Statement choose the accounting period For the Quarter Ending December 31, 2020For the Year Ending December 31, 2020December 31, 2020
select an income statement item Total Operating ExpensesNet Income / (Loss)Income Tax ExpenseSalesEnding InventoryBeginning InventoryInterest ExpenseSelling and Administrative ExpensesOperating ExpensesIncome Before Income TaxesPurchasesCost of Goods SoldGross ProfitIncome from Operations		$enter a dollar amount
select an income statement item Interest ExpenseSalesPurchasesTotal Operating ExpensesSelling and Administrative ExpensesBeginning InventoryCost of Goods SoldEnding InventoryGross ProfitIncome Before Income TaxesIncome from OperationsOperating ExpensesIncome Tax ExpenseNet Income / (Loss)		enter a dollar amount
select a summarizing line for the first part Ending InventoryTotal Operating ExpensesPurchasesGross ProfitIncome from OperationsOperating ExpensesIncome Tax ExpenseSalesBeginning InventorySelling and Administrative ExpensesCost of Goods SoldIncome Before Income TaxesInterest ExpenseNet Income / (Loss)		enter a total amount for the first part
select an income statement item Income Before Income TaxesIncome from OperationsIncome Tax ExpenseSelling and Administrative ExpensesInterest ExpenseNet Income / (Loss)SalesTotal Operating ExpensesCost of Goods SoldOperating ExpensesPurchasesBeginning InventoryEnding InventoryGross Profit		enter a dollar amount
select a summarizing line for the second part Income Tax ExpenseGross ProfitIncome Before Income TaxesIncome from OperationsInterest ExpenseBeginning InventoryNet Income / (Loss)Selling and Administrative ExpensesCost of Goods SoldOperating ExpensesPurchasesSalesTotal Operating ExpensesEnding Inventory		enter a total amount for the second part
select an income statement item PurchasesBeginning InventoryIncome from OperationsSelling and Administrative ExpensesTotal Operating ExpensesIncome Tax ExpenseEnding InventoryCost of Goods SoldNet Income / (Loss)Gross ProfitSalesIncome Before Income TaxesOperating ExpensesInterest Expense		enter a dollar amount
select a summarizing line for the third part SalesIncome Before Income TaxesIncome Tax ExpenseIncome from OperationsGross ProfitPurchasesOperating ExpensesSelling and Administrative ExpensesTotal Operating ExpensesNet Income / (Loss)Beginning InventoryEnding InventoryCost of Goods Sold		enter a total amount for the third part
select an income statement item Operating ExpensesIncome from OperationsPurchasesInterest ExpenseSalesIncome Before Income TaxesBeginning InventorySelling and Administrative ExpensesTotal Operating ExpensesCost of Goods SoldEnding InventoryGross ProfitIncome Tax ExpenseNet Income / (Loss)		enter a dollar amount
select a closing name for the budgeted income statement Total Operating ExpensesSelling and Administrative ExpensesIncome Tax ExpenseOperating ExpensesSalesPurchasesBeginning InventoryInterest ExpenseCost of Goods SoldNet Income / (Loss)Ending InventoryIncome Before Income TaxesGross ProfitIncome from Operations		$enter a total net income or loss amount

Answer 1

Ans.	NORTH COMPANY
	Budgeted Income Statement
	For the Year Ending December 31, 2020
	Particulars	Amount
	Sales	$2,448,100
	Less: Cost of goods sold	-$1,166,560
	Gross profit	$1,281,540
	Less: Selling and administrative expenses	-$308,900
	Operating income (EBIT)	$972,640
	Less: Interest expenses	-$10,300
	Earnings before tax	$962,340
	Less: Income tax expense	-$213,300
	Net income	$749,040
	*Cost of goods sold = Units sold * Cost per unit sold
	50,720 * $23
	$1,166,560
	*Selling and administrative is an operting expense.