Question 8 Partially correct Mark 0.54 out of 1.25 P Flag question Budgeted Income Statement Pendleton Company, a merchandising company, is developing its master budget for 2015. The income statement for 2014 is as follows: Pendleton Company Income Statement For Year Ending December 31, 2014 Gross sales $750,000 Less uncollectible accounts 7,500 Collected sales 742,500 Cost of goods sold 430,000 Profit before operating expense 312,500 Operating expenses (including $25,000 depreciation) 200,500 Income before tax $112,000 The following are management's goals and forecasts for 2015: 1. Selling prices will increase by 6 percent, and sales volume will increase by 4 percent. 2. The cost of merchandise will increase by 3 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 2 percent of budgeted sales. The following are management's goals and forecasts for 2015: 1. Selling prices will increase by 6 percent, and sales volume will increase by 4 percent. 2. The cost of merchandise will increase by 3 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 2 percent of budgeted sales. 2 Required Prepare a budgeted functional income statement for 2015. Do not use negative signs with any of your answers. Pendleton Company Budgeted Income Statement For the Year Ending December 31, 2015 Sales 826,800 Less uncollectible accounts 165,360 x Collected sales 810,264 Cost of goods sold 442,900 x Profit before operating expense 367,364 x Operating expenses 218,050 Income before tax $ 149,314 x