Budgeted Income Statement

Coral Seas Jewelry Company makes and sells costume jewelry. For the coming year, Coral Seas expects sales of $18,600,000 and cost of goods sold of $10,230,000. Advertising is a key part of Coral Seas' business strategy, and total marketing expense for the year is budgeted at $3,348,000. Total administrative expenses are expected to be $744,000. Coral Seas has no interest expense. Income taxes are paid at the rate of 40 percent of operating income.

Required:

1. Construct a budgeted income statement for Coral Seas Jewelry Company for the coming year.

Coral Seas Jewelry Company
Budgeted Income Statement
For the Coming Year
		$fill in the blank 982011023f95070_2
		fill in the blank 982011023f95070_4
Gross margin		$fill in the blank 982011023f95070_5
Less:
	$fill in the blank 982011023f95070_7
	fill in the blank 982011023f95070_9	fill in the blank 982011023f95070_10
Operating income		$fill in the blank 982011023f95070_11
		fill in the blank 982011023f95070_13
		$fill in the blank 982011023f95070_15

2. What if Coral Seas had interest payments of $558,000 during the year? What effect would that have on operating income? On income before taxes? On net income? If no effect, select "no impact" and enter "0".

Operating income		to	$fill in the blank e0d252f6cf8bf93_2
Income before taxes		to	$fill in the blank e0d252f6cf8bf93_4
Net income		to	$fill in the blank e0d252f6cf8bf93_6