Question

Script Mill has just completed its 5th year in business, and the financials for December 2022 are as follows:

Budgeted Sales: $560,000
Actual Sales: $567,923
Purchases: $294,823
Beginning Inventory: $56,000
Ending Inventory (10% of next month's sales): To be calculated
Admin Salaries (5% of Budgeted Sales): $50,320
Marketing Expense (2% of Budgeted Sales): To be calculated
Sales Commissions (2% of Budgeted Sales): To be calculated
Rent Expense: $7,500
Depreciation Expense: $1,100
Utilities: $2,500
Taxes (15% of Income from Operations): To be calculated
Given that Script Mill has historically experienced a 10% sales increase and anticipates this trend to continue, let's prepare a budgeted income statement:

Sales: $567,923 + (10% Increase)
Cost of Goods Sold (COGS):
Beginning Inventory
Purchases
Cost of Goods Available for Sale
Ending Inventory (10% of next month's sales)
Cost of Goods Sold
Gross Profit: Sales - COGS
Operating Expenses:
Administrative Salaries
Marketing Expenses (2% of Budgeted Sales)
Sales Commissions (2% of Budgeted Sales)
Rent Expense
Depreciation Expense
Utilities
Total Operating Expenses
Income from Operations: Gross Profit - Total Operating Expenses
Income Tax Expense: 15% of Income from Operations
Net Income (Loss): Income from Operations - Income Tax Expense
Now, let's calculate the values for the missing parts:

Ending Inventory (10% of next month's sales): 10% of the anticipated sales for the next month.
Marketing Expenses (2% of Budgeted Sales): 2% of $560,000.
Sales Commissions (2% of Budgeted Sales): 2% of $560,000.
Income Tax Expense: 15% of Income from Operations.
Fill in the calculated values into the script accordingly.

Answer 1

To prepare a budgeted income statement for Script Mill, calculate the missing values: Ending Inventory, Marketing Expenses, Sales Commissions, and Income Tax Expense.

Step-by-step explanation:

To prepare a budgeted income statement for Script Mill, we need to calculate the missing values. Here are the calculations:

1. Ending Inventory (10% of next month's sales): 10% of the anticipated sales for the next month ($567,923 x 10% = $56,792.30).
2. Marketing Expenses (2% of Budgeted Sales): 2% of $560,000 ($560,000 x 2% = $11,200).
3. Sales Commissions (2% of Budgeted Sales): 2% of $560,000 ($560,000 x 2% = $11,200).
4. Income Tax Expense: 15% of Income from Operations ($Gross Profit - Total Operating Expenses) ($Gross Profit - Total Operating Expenses) x 15%.

Once you have the calculated values, you can fill them into the script and complete the budgeted income statement.