Panther Corporation appeared to be experiencing a good year. Sales in the first quarter were one-third ahead of last year, and the sales department predicted that this rate would continue throughout the entire year. The controller asked Janet Nomura, a summer accounting intern, to prepare a draft forecast for the year and to analyze the differences from last year's results. She based the forecast on actual results obtained in the first quarter plus the expected costs of production to be completed in the remainder of the year. She worked with various department heads (production, sales, and so on) to get the necessary information. The results of these efforts follow. PANTHER CORPORATION Expected Account Balances for December 31, Year 2 $ 4,800 320,000 192,000 520,000 Cash Accounts receivable Inventory (January 1, year 2) Plant and equipment Accumulated depreciation Accounts payable Notes payable (due within one year) Accrued payables Common stock Retained earnings Sales revenue Other income Manufacturing costs Materials Direct labor $ 164,000 180,000 200,000 93,000 280,000 432,800 2,400,000 36,000 Variable overhead 852,000 872,000 520,000 20,000 31,000 Depreciation Other fixed overhead Marketing Commissions Salaries Promotion and advertising 80,000 64,000 180,000 Administrative Salaries 64,000 Travel 10,000 Office costs 36,000 Income taxes Dividends 20,000 $3,785,800 $3,785,800 Adjustments for the change in inventory and for income taxes have not been made. The scheduled production for this year is 450,000 units, and planned sales volume is 400,000 units. Sales and production volume was 300,000 units last year. The company uses a full-absorption costing and FIFO inventory system and is subject to a 40 percent income tax rate. The actual income statement for last year follows. Page 576 PANTHER CORPORATION Statement of Income and Retained Earnings For the Budget Year Ended December 31, Year 1 Revenues Sales revenue $1,800,000 60,000 $1,860,000 Other income Expenses Cost of goods sold Materials Direct labor Variable overhead Fixed overhead $ 528,000 540,000 324,000 48,000 $1,440,000 192,000 $1,632,000 192,000 $1,440,000 Beginning inventory Ending inventory Selling Salaries $ Commissions 54,000 60,000 126,000 240,000 Promotion and advertising General and administrative $ Salaries Travel 56,000 8,000 32,000 96,000 33,600 Office costs Income taxes Operating profit Beginning retained earnings Subtotal Less dividends Ending retained earnings 1,809,600 50,400 402,400 $ 452,800 20,000 $ 432,800 Required Prepared a budgeted income statement and balance sheet
