Create a quarterly budgeted income statement for Year 2 based on prior year data and discussions with management, using the excel template provided. Income Statement Actual Quarterly for Year 1 Year 1 Actual Provided: 01 Year 1 Q2 Year 1 Q3 Year 1 04 Year 1 New construction revenue 35,605 42,790 48,326 43,098 Remodel revenue 24,568 29,482 35,378 31,133 Total revenue 60,173 72,272 83,704 74,231 Less: Cost of goods sold 39,112 46,977 53,571 47,508 Gross profit 21,061 25,295 30,133 26,723 Less: Selling and administrative expenses Salaries expense 3,400 3,650 3,900 4,400 Marketing expense 1,568 2,250 2,646 1,624 Legal expense 3,009 3,614 4,185 3,712 Business development expense 2,600 2,600 3,520 3,520 Depreciation expense 600 700 750 750 Office supplies expense 447 870 1,242 793 Miscellaneous expense 1,956 2,349 2,679 2,375 Total selling and admin expenses 13,579 16,032 18,922 17,174 Net operating income 7,481 9,263 11,212 Use the following assumptions for the budgeted income statement in Year 2 based on historical results and discussions with management New construction and - Calculate the average for Year 1. This will be the amount of revenue for Q1 Remodel revenue and Q4 of Year 2 - Q2 and 3 of Year 2 will be 15% higher than the Year 1 average due to high demand for homes in the spring Cost of goods sold - 61% of total revenue in Q1 and Q3 in Year 2 - 59% of total revenue in Q2 and 04 in Year 2. Salaries expense - Mixed expense with a fixed portion of S4,800 per quarter for Q1, Q2, Q3. The variable portion is $5 per project - Fixed portion will be 15% higher in Q4 due to year-end bonuses. Variable will be the same as $5 per project. - 22 projects expected in Q1 and Q2 in Year 2. - 32 projects expected in Q3 and Q4 in Year 2 Marketing expense - Equal to the same quarter in Year 1. Legal expense - Calculate the average for Year 1. This will be the amount for every quarter in Year 2 Business development - $3.100 in Q1 and Q2 of Year 2. expense - Due to an increase in projects, increase to $4.000 in Q3 and Q4 of Year 2 Depreciation expense - $875 in 1 and 2 of Year 2. - Will increase to $825 in Q3 and 4 of Year 2 due to new equipment. Office supplies expense - Calculate the average for Year 1. This will be the amount for Q1 and 4 of Year 2. - Q2 and 3 of Year 2 will be 25% higher with expected increased business Miscellaneous expense - 4% of COGS each quarter of Year 2. Use the following assumptions for the cash budget based on historical results and discussions with management: New construction and All sales on made on account and have the following collection pattern: Remodel revenue - 55% will be collected in the quarter the sale is made -35% will be collected in the quarter following the sale - 5% will be collected two quarters following the sale Cost of goods sold All purchases of cost of goods sold are on account and have the following payment pattern: - 50% of purchases are paid for in the quarter of purchase - The remainder are paid in the following quarter Selling and - Cash is paid for all expenses in the quarter they are incurred except for administrative expenses depreciation expense (which is a non-cash expense) Purchase of equipment - Equipment costing $13.400 was purchased at the beginning of Q3 of Year 2 Borrow from Bank - The company signed a promissory note to borrow $14,800 at the beginning of Q2 of Year 2 - Interest of $180 is due at the end of each quarter, beginning in Q3 of Year 2 - No loans will be repaid in Year 2 Beginning cash balance - Started Year 2 with a $10,800 cash balance Create a quarterly budgeted income statement for Year 2 based on prior year data and discussions with management, using the excel template provided. Income Statement Actual Quarterly for Year 1 Year 1 Actual Provided: 01 Year 1 Q2 Year 1 Q3 Year 1 04 Year 1 New construction revenue 35,605 42,790 48,326 43,098 Remodel revenue 24,568 29,482 35,378 31,133 Total revenue 60,173 72,272 83,704 74,231 Less: Cost of goods sold 39,112 46,977 53,571 47,508 Gross profit 21,061 25,295 30,133 26,723 Less: Selling and administrative expenses Salaries expense 3,400 3,650 3,900 4,400 Marketing expense 1,568 2,250 2,646 1,624 Legal expense 3,009 3,614 4,185 3,712 Business development expense 2,600 2,600 3,520 3,520 Depreciation expense 600 700 750 750 Office supplies expense 447 870 1,242 793 Miscellaneous expense 1,956 2,349 2,679 2,375 Total selling and admin expenses 13,579 16,032 18,922 17,174 Net operating income 7,481 9,263 11,212 Use the following assumptions for the budgeted income statement in Year 2 based on historical results and discussions with management New construction and - Calculate the average for Year 1. This will be the amount of revenue for Q1 Remodel revenue and Q4 of Year 2 - Q2 and 3 of Year 2 will be 15% higher than the Year 1 average due to high demand for homes in the spring Cost of goods sold - 61% of total revenue in Q1 and Q3 in Year 2 - 59% of total revenue in Q2 and 04 in Year 2. Salaries expense - Mixed expense with a fixed portion of S4,800 per quarter for Q1, Q2, Q3. The variable portion is $5 per project - Fixed portion will be 15% higher in Q4 due to year-end bonuses. Variable will be the same as $5 per project. - 22 projects expected in Q1 and Q2 in Year 2. - 32 projects expected in Q3 and Q4 in Year 2 Marketing expense - Equal to the same quarter in Year 1. Legal expense - Calculate the average for Year 1. This will be the amount for every quarter in Year 2 Business development - $3.100 in Q1 and Q2 of Year 2. expense - Due to an increase in projects, increase to $4.000 in Q3 and Q4 of Year 2 Depreciation expense - $875 in 1 and 2 of Year 2. - Will increase to $825 in Q3 and 4 of Year 2 due to new equipment. Office supplies expense - Calculate the average for Year 1. This will be the amount for Q1 and 4 of Year 2. - Q2 and 3 of Year 2 will be 25% higher with expected increased business Miscellaneous expense - 4% of COGS each quarter of Year 2. Use the following assumptions for the cash budget based on historical results and discussions with management: New construction and All sales on made on account and have the following collection pattern: Remodel revenue - 55% will be collected in the quarter the sale is made -35% will be collected in the quarter following the sale - 5% will be collected two quarters following the sale Cost of goods sold All purchases of cost of goods sold are on account and have the following payment pattern: - 50% of purchases are paid for in the quarter of purchase - The remainder are paid in the following quarter Selling and - Cash is paid for all expenses in the quarter they are incurred except for administrative expenses depreciation expense (which is a non-cash expense) Purchase of equipment - Equipment costing $13.400 was purchased at the beginning of Q3 of Year 2 Borrow from Bank - The company signed a promissory note to borrow $14,800 at the beginning of Q2 of Year 2 - Interest of $180 is due at the end of each quarter, beginning in Q3 of Year 2 - No loans will be repaid in Year 2 Beginning cash balance - Started Year 2 with a $10,800 cash balance