Question

Budgeted Income Statement Coral Seas Jewelry Company makes and sells costume jewelry. For the coming year, Coral Seas expects sales of $19,700,000 and cost of goods sold of $10,835,000. Advertising is a key part of Coral Seas' business strategy, and total marketing expense for the year is budgeted at $3,546,000. Total administrative expenses are expected to be $788,000. Coral Seas has no interest expense. Income taxes are paid at the rate of 40 percent of operating income.

Required:
Construct a budgeted income statement for Coral Seas Jewelry Company for the coming year. Enter your answers in dollars and not in millions.

Answer 1

The budgeted net income for the coming year is $2,718,600.

Step-by-step explanation:

The budgeted income statement for Coral Seas Jewelry Company for the coming year can be constructed as follows:

Coral Seas Jewelry Company

Budgeted Income Statement

For the Coming Year

Details Amount ($)

Sales 19,700,000

Cost of Goods Sold (10,835,000)

Gross Margin 8,865,000

Marketing Expenses (3,546,000)

Administrative Expenses (788,000)

Operating income 4,531,000

Income Tax (40%) (1,812,400)

Net Income 2,718,600