Budgeted selling and administrative expenses for King Tire Co. in P for the year ended December 31, 2016, were as follows:
Advertising expense .......................................... $942,000
Office rent expense............................................ 125,000
Office salaries expense........................................ 821,000
Office supplies expense....................................... 45,500
Officers’ salaries expense..................................... 661,000
Sales salaries expense ........................................ 868,000
Telephone and fax expense................................... 33,500
Travel expense ................................................ 443,000
Required:
1. Prepare a selling and administrative expense budget, in good form, for the year 2016.
2. Using the information above and the budgets prepared in P, prepare a budgeted income statement for the year 2016, assuming an income tax rate of 40%.