LESSON 14-2
Budgeted Income Statement
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2
SALES BUDGET SCHEDULE
A statement that shows the projected net
sales for a budget period is called a sales
budget schedule
Prepared first because the other schedules
are affected by the projected net sales
Projected net sales are used to estimate the
amount of merchandise to purchase & the
amount that may be spent for salaries,
advertising, & other selling & administrative
expenses
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LESSON 14-2
3
SALES BUDGET SCHEDULE
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2
1
1. Enter actual and projected units.
2. Determine sales percentages.
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3
5
4
3. Calculate unit sales volume.
4. Enter unit sales prices.
5. Calculate projected net sales.
6. Calculate total net sales.
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LESSON 14-2
4
PURCHASES BUDGET SCHEDULE
A statement prepared to show the
projected amount of purchases that will be
required during a budget period is called a
purchases budget schedule
Factors to consider when planning a
purchases budget schedule:
Projected unit sales
The quantity of merchandise on hand at the
beginning of the budget period
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LESSON 14-2
5
PURCHASES BUDGET SCHEDULE
page 420
4
1. Calculate ending
inventory for each quarter.
2. Enter projected unit sales.
3. Determine total units needed.
4. Enter beginning inventory.
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2
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3
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5
5. Determine
purchases.
6. Enter unit cost.
7. Determine cost of
purchases.
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LESSON 14-2
6
SELLING EXPENSES BUDGET SCHEDULE
A statement prepared to show projected
expenditures related directly to the selling
operations is called a selling expenses
budget schedule
Sales managers project the information for the
selling expenses budget schedule by
collaborating with other sales personnel
Some selling expense items are relatively stable &
require little budget planning (depreciation expense,
insurance premiums)
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LESSON 14-2
7
SELLING EXPENSES
BUDGET SCHEDULE
page 421
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LESSON 14-2
8
ADMINISTRATIVE EXPENSES BUDGET
SCHEDULE
A statement prepared to show projected
expenditures for all aoperating expenses
not directly related to selling operations is
called a administrative expenses budget
schedule
Budget schedule uses information from:
Past records
Company plans
Sales & selling expenses budget schedules
Discussions with other managers
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LESSON 14-2
9
ADMINISTRATIVE EXPENSES
BUDGET SCHEDULE
CENTURY 21 ACCOUNTING © Thomson/South-Western
page 423
LESSON 14-2
10
OTHER REVENUE & EXPENSES BUDGET
SCHEDULE
Budgeted revenue & expenses from
activities other than normal operations are
shown in a statement called other revenue
& expenses budget schedule
Typical items in this budget are:
Interest income
Interest expense
Gains or losses on the sale of plant assets
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LESSON 14-2
11
OTHER REVENUE AND EXPENSES
BUDGET SCHEDULE
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page 424
LESSON 14-2
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BUDGETED INCOME STATEMENT
A statement that shows a company’s
projected sales, costs, expenses, & net
income is called a budgeted income
statement
Most businesses will prepare a shortened
budgeted income statement & attach the
budget schedules with the details
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LESSON 14-2
13
BUDGETED INCOME STATEMENT
page 425
1
2
1. Beginning inventory: 39,200 units  $3.30 = $129,360
2. Ending inventory: 42,100 units  $3.40 = $143,140
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LESSON 14-2
14
CALCULATING FEDERAL
INCOME TAX EXPENSE
page 425
 Amounts from the five budget schedules allow the
company to project net income before federal income tax
 This allow the company to estimate Federal income taxes
using a tax rate table furnished by the IRS
15% of net income before taxes, zero to $50,000.00.
25% of net income before taxes less $5,000.00, $50,001.00 to $75,000.00.
34% of net income before taxes less $11,750.00, $75,001.00 to $100,000.00.
39% of net income before taxes less $16,750.00, $100,001.00 to $335,000.00.
Net Income before
Federal Income Tax

Tax Rate
=
$125,970

39% less $16,750
=
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Federal Income
Tax Expense
$32,378.30
rounded to $32,380
LESSON 14-2
15
TERMS REVIEW
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page 426
sales budget schedule
purchases budget schedule
selling expenses budget schedule
administrative expenses budget schedule
other revenue and expenses budget schedule
budgeted income statement
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 14-2