Problem 8-29 (continued)
4. Income statement:
Hillyard Company
Income Statement
For the Quarter Ended March 31
Sales …………………………………………………
$1,300,000
Cost of goods sold:
Beginning inventory (Given) …………………
$ 60,000
Add purchases (Part 2) ………………………..
750,000
Goods available for sale ……………………….
810,000
Ending inventory (Part 2) …………………….
30,000
780,000
*
Gross margin ……………………………………….
520,000
Selling and administrative expenses:
Salaries and wages ($27,000 × 3) ………….
81,000
Advertising ($70,000 × 3)) …………………..
210,000
Shipping (5% of sales) ………………………..
65,000
Depreciation (given) …………………………...
42,000
Other expenses (3% of sales) ……………….
39,000
437,000
Net operating income …………………………...
83,000
Interest expense (Part 4) ……………………….
2,400
Net income …………………………………………
$ 80,600
Case 8-31 (continued)
3.
Earrings Unlimited
Budgeted Income Statement
For the Three Months Ended June 30
Sales (Part 1 a.) …………………………………
$2,150,000
Variable expenses:
Cost of goods sold @ $4 per unit …………
$860,000
Commissions @ 4% of sales ……………….
86,000
946,000
Contribution margin …………………………….
1,204,000
Fixed expenses:
Advertising ($200,000 × 3) ………………..
600,000
Rent ($18,000 × 3) …………………………..
54,000
Salaries ($106,000 × 3) …………………….
318,000
Utilities ($7,000 × 3) …………………………
21,000
Insurance ($3,000 × 3) ……………………..
9,000
Depreciation ($14,000 × 3) ………………..
42,000
1,044,000
Net operating income ………………………….
160,000
Interest expense (Part 2) ……………………..
5,300
Net income ……………………………………….
$ 154,700
