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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
