there was an error the Actual retained earnings at the end of the last year totalled $753,370" not $243,370.

1. Prepare a quarterly budgeted income statement.

Big Banana Sport Drinks is a business that sests a specialty sports driks. The company's fiscal year ends on December 31. Intormation to be used for the operating budget this coming year follows. Sales and Merchandise Purchases Budost loformation - Sales for this coming year ending December 31 in units are erpected to be as follows: - Each unit is sold for $12. - Cost of goods sold is 52 percent of saies (to be used for the merchandine purchases budget). Merchandise inventory is maintained at a level equal to 20 percent of the next quater's cost of goods sold. Budgeted sales for the first quarter of the following year are 51,518,000. Oserating and interest Expenses Buclact infomation - Marsgement estimates al other costs, aside from advertiving and depreciation, are fued. - Seling and administrative cost estimates for the first quaner of the coming year are. - Salary expenses for the fourth quarter will be $25,000 higher in anticipation of tigher sales. - Advertsing expenses for each quarter will be 12% higher thas the previous quater and will therefore increase throughout the year. Capital Expenditure and Cash Budget information - The company plans to pay cash for propeny, plant, and equipment totaling 575,000 at the end of the third quarter. Note: this will cause the depreciation for the fourth quaser to increase by $1,450 to $46,550 - The company expects to collect 75 percent of sales in the cuarter of sule and 25 percent the cquarer following the sale. Accounts receivable at the end of last year totaied $365,000, all of which will be collected during the first quarter of this coming year. - All inventory purchases are on crodt. The company expects to pay 60 percent of inventory purchases in the quarter of purchase and 40 percent the following quarter. Accounts payable at the end of last year totaled $280.000, all of which will be paid during the frst quarter of this coming year. - The cash balance at the beginning of this coming year is expected to be $68,000 - A dividend payment of $120,000 will be paid in each quatter to the owners of the business. - $150,000 of the long-term debt will be repaid at the end of 04 . Audaeted Balance Shest tnformation - Assume 25 percent of fourth quarter budgeled sales will be colectiod in tal the following year (this represents accounts receivable at the end of the fourth quarter). - Big Banana started the year with long-term debt of 5800,000 . - Expected account balances at the end of the fourth quarter are: - Actual retained eamings at the end of the last year totated $243.370. Big Banana Sport Drinks is a business that sests a specialty sports driks. The company's fiscal year ends on December 31. Intormation to be used for the operating budget this coming year follows. Sales and Merchandise Purchases Budost loformation - Sales for this coming year ending December 31 in units are erpected to be as follows: - Each unit is sold for $12. - Cost of goods sold is 52 percent of saies (to be used for the merchandine purchases budget). Merchandise inventory is maintained at a level equal to 20 percent of the next quater's cost of goods sold. Budgeted sales for the first quarter of the following year are 51,518,000. Oserating and interest Expenses Buclact infomation - Marsgement estimates al other costs, aside from advertiving and depreciation, are fued. - Seling and administrative cost estimates for the first quaner of the coming year are. - Salary expenses for the fourth quarter will be $25,000 higher in anticipation of tigher sales. - Advertsing expenses for each quarter will be 12% higher thas the previous quater and will therefore increase throughout the year. Capital Expenditure and Cash Budget information - The company plans to pay cash for propeny, plant, and equipment totaling 575,000 at the end of the third quarter. Note: this will cause the depreciation for the fourth quaser to increase by $1,450 to $46,550 - The company expects to collect 75 percent of sales in the cuarter of sule and 25 percent the cquarer following the sale. Accounts receivable at the end of last year totaied $365,000, all of which will be collected during the first quarter of this coming year. - All inventory purchases are on crodt. The company expects to pay 60 percent of inventory purchases in the quarter of purchase and 40 percent the following quarter. Accounts payable at the end of last year totaled $280.000, all of which will be paid during the frst quarter of this coming year. - The cash balance at the beginning of this coming year is expected to be $68,000 - A dividend payment of $120,000 will be paid in each quatter to the owners of the business. - $150,000 of the long-term debt will be repaid at the end of 04 . Audaeted Balance Shest tnformation - Assume 25 percent of fourth quarter budgeled sales will be colectiod in tal the following year (this represents accounts receivable at the end of the fourth quarter). - Big Banana started the year with long-term debt of 5800,000 . - Expected account balances at the end of the fourth quarter are: - Actual retained eamings at the end of the last year totated $243.370