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17 December, 18:03

Calgary Industries is preparing a budgeted income statement for 2018. Predicted sales for the year are $760,000 and cost of goods sold is 40% of sales. The expected selling expenses are $84,000 and the expected general and administrative expenses are $93,000, which includes $26,000 of depreciation. The company's income tax rate is 30%. The budgeted net income for 2018 is:

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  1. 17 December, 18:12
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    The budgeted net income for 2018 is : $195,300

    Explanation:

    Prepare the budgeted income statement for 2018 as follows:

    Sales $760,000

    Less Cost of Sales ($760,000 * 40%) ($304,000)

    Gross Profit $456,000

    Less Expenses:

    Selling Expenses ($84,000)

    General and administrative ($93,000)

    Net Income before tax $279,000

    Income tax expense ($279,000 * 30%) ($83,700)

    Net Income for the year $195,300

    Conclusion:

    The budgeted net income for 2018 is : $195,300
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