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 Cash $ 5,300 Accounts receivable 325,000 Inventory (January 1, Year 2) 200,000 Plant and equipment 545,000 Accumulated depreciation $ 169,000 Accounts payable 185,000 Notes payable (due within one year) 205,000 Accrued payables 98,000 Common stock 330,000 Retained earnings 636,800 Sales revenue 2,450,000 Other income 46,000 Manufacturing costs Materials 935,000 Direct labor 972,000 Variable overhead 580,000 Depreciation 25,000 Other fixed overhead 36,000 Marketing Commissions 90,000 Salaries 69,000 Promotion and advertising 190,000 Administrative Salaries 69,000 Travel 12,500 office costs 41,000 Income taxes Dividends 25,000 $4,119,800 $4,119,800 Adjustments for the change in inventory and for income taxes have not been made. The scheduled production for this year is 455,000 units, and planned sales volume is 420,000 units. Sales and production volume was 320,000 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: $2,058,000 PANTHER CORPORATION Statement of Income and Retained Earnings For the Budget Year Ended December 31, Year 1 Revenues Sales revenue $1,980,000 Other income 78,000 Expenses Cost of goods sold Materials $ 583,000 Direct labor 610,000 Variable overhead 354,000 Fixed overhead 53,000 $1,600,000 Beginning inventory 200,000 $1,800,000 Ending inventory 200,000 $1,600,000 Selling Salaries 59,000 Commissions 65,000 Promotion and advertising 131,000 255,000 General and administrative Salaries $ 61,000 Travel 10,000 Office costs 37,000 108,000 Income taxes 38,000 Operating profit Beginning retained earnings Subtotal 2,001,000 57,000 604,800 $ 661,800 Less dividends Ending retained earnings 25,000 636,800 $ Required: Prepared a budgeted income statement and balance sheet. Complete this question by entering your answers in the tabs below. Budgeted Inc Stmt Budgeted Balance Sheet $ 2,496,000 PANTHER CORPORATION Budgeted Income Statement For the Year Ended December 31, Year 2 Revenue: Sales revenue $ 2,450,000 Other income 46,000 Total Revenue Expenses: Cost of goods manufactured & sold: Materials 935,000 Direct labor 972,000 Variable overhead 580,000 Fixed overhead 61,000 $ 2,548,000 Beginning inventory 200,000 2,748,000 Ending inventory 196,000 Marketing: Salaries $ 69,000 Commissions 90,000 $ 2,552,000 190,000 $ 349,000 Promotions and advertising Administrative: Salaries $ Travel 69,000 12,500 41,000 Office costs Income taxes (credit) Total expenses Operating profit (loss) 122,500 (211,000) 29 $ $ 2,495,971 Budgeted December 31, Year 2 $ Current Assets Cash Accounts receivable Inventory Income tax receivable >> 5,300 325,000 196,000 X 211,000 O $ 737,300 545,000 (169,000) $ 737,300 Total current assets Plant and equipment Accumulated depreciation Total assets Current liabilities Accounts payable Notes payable Accrued payable $ 185,000 205,000 98,000 $ 488,000 Total current liabilities Shareholders' equity Common stock Retained earnings 330,000 295,300 Total shareholders' equity Total liabilities and shareholders' equity 625,300 $ 1,113,300 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 Cash $ 5,300 Accounts receivable 325,000 Inventory (January 1, Year 2) 200,000 Plant and equipment 545,000 Accumulated depreciation $ 169,000 Accounts payable 185,000 Notes payable (due within one year) 205,000 Accrued payables 98,000 Common stock 330,000 Retained earnings 636,800 Sales revenue 2,450,000 Other income 46,000 Manufacturing costs Materials 935,000 Direct labor 972,000 Variable overhead 580,000 Depreciation 25,000 Other fixed overhead 36,000 Marketing Commissions 90,000 Salaries 69,000 Promotion and advertising 190,000 Administrative Salaries 69,000 Travel 12,500 office costs 41,000 Income taxes Dividends 25,000 $4,119,800 $4,119,800 Adjustments for the change in inventory and for income taxes have not been made. The scheduled production for this year is 455,000 units, and planned sales volume is 420,000 units. Sales and production volume was 320,000 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: $2,058,000 PANTHER CORPORATION Statement of Income and Retained Earnings For the Budget Year Ended December 31, Year 1 Revenues Sales revenue $1,980,000 Other income 78,000 Expenses Cost of goods sold Materials $ 583,000 Direct labor 610,000 Variable overhead 354,000 Fixed overhead 53,000 $1,600,000 Beginning inventory 200,000 $1,800,000 Ending inventory 200,000 $1,600,000 Selling Salaries 59,000 Commissions 65,000 Promotion and advertising 131,000 255,000 General and administrative Salaries $ 61,000 Travel 10,000 Office costs 37,000 108,000 Income taxes 38,000 Operating profit Beginning retained earnings Subtotal 2,001,000 57,000 604,800 $ 661,800 Less dividends Ending retained earnings 25,000 636,800 $ Required: Prepared a budgeted income statement and balance sheet. Complete this question by entering your answers in the tabs below. Budgeted Inc Stmt Budgeted Balance Sheet $ 2,496,000 PANTHER CORPORATION Budgeted Income Statement For the Year Ended December 31, Year 2 Revenue: Sales revenue $ 2,450,000 Other income 46,000 Total Revenue Expenses: Cost of goods manufactured & sold: Materials 935,000 Direct labor 972,000 Variable overhead 580,000 Fixed overhead 61,000 $ 2,548,000 Beginning inventory 200,000 2,748,000 Ending inventory 196,000 Marketing: Salaries $ 69,000 Commissions 90,000 $ 2,552,000 190,000 $ 349,000 Promotions and advertising Administrative: Salaries $ Travel 69,000 12,500 41,000 Office costs Income taxes (credit) Total expenses Operating profit (loss) 122,500 (211,000) 29 $ $ 2,495,971 Budgeted December 31, Year 2 $ Current Assets Cash Accounts receivable Inventory Income tax receivable >> 5,300 325,000 196,000 X 211,000 O $ 737,300 545,000 (169,000) $ 737,300 Total current assets Plant and equipment Accumulated depreciation Total assets Current liabilities Accounts payable Notes payable Accrued payable $ 185,000 205,000 98,000 $ 488,000 Total current liabilities Shareholders' equity Common stock Retained earnings 330,000 295,300 Total shareholders' equity Total liabilities and shareholders' equity 625,300 $ 1,113,300