Problem 1-Budgeted Income Statement

Progressive Motors is a chain of car dealerships. Sales in the fourth quarter of 2019 last year were $7,000,000. Suppose management projects that its current year's quarterly sales will increase by 3% in quarter 1, by another 2% in quarter 2, by another 4% in quarter 3 and by another 5% in quarter 4. Management expects cost of goods sold to be 50% of revenues every quarter, while operating expenses should be 30% of revenues during the first quarter, 25% of revenues during the second quarter, 35% of revenues during the third quarter and 35% during the fourth quarter.

Required:

provide a budgeted income statement for each of the four quarters and for the entire year of 2020.

Problem 2-provide a budgeted balance sheet

Use the following information to provide a budgeted balance sheet for Myers Corporation at March 31, 20XX. Show computations for the cash and stockholders' equity amounts.

A. March 31 inventory balance, $13,405.

B. March payments for inventory, $4,300.

C. March payments of accounts payable and accrued liabilities, $8,500.

D. March 31 accounts payable balance, $2,100.

E. February 28 furniture and fixtures balance, $34,600; accumulated depreciation balance, $29,860.

F. February 28 stockholders' equity, $28,520.

G. March depreciation expense, $700.

H. Cost of Goods Sold, 70% of sales.

I. Other March expenses, including income tax, total $8,000; paid in cash.

J. February 28 cash balance, $11,500.

K. March budgeted sales, $12,500.

L. March 31 accounts receivable balance; one-fourth of March sales.

M. March cash receipts, $14,400.