Pendleton Company, a merchandising company, is developing its master budget for 2013. The income statement for 2012 is as follows

Pendleton Company

Income Statement

For year ending December 31, 2012

Gross Sales ------ $750,000

Less estimated uncollectible accounts ---(7,500)

Net Sales --- 742,500

Cost of Goods Sold ---- (430,000)

Gross Profit ----- 312,500

Operating expenses (including $25,000 deprec) ---- (200,500)

Net Income ---- $112,500

The following are management's goals and forecasts for 2013:

1. Selling prices will increase by 8 percent, and sales volume will increase by 5 percent.

2. The cost of merchandise will increase by 4 percent

3. All operating expenses are fixed and are paid in the month incurred. Price increases for operating expenses will be 10 percent. The company uses straight-line depreciation.

4. The estimated uncollectibles are 1 percent of budgeted sales.

Required:

Prepare a budgeted functional income statement for 2013