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The Budgeted Income Statement

Learn more about budgeted income statement.

The Budgeted Income Statement

With interest expenses gotten from the cash budget, Royal can prepare the budgeted income statement.

Image of the Royal Company Budget Income Statement for 3 months Ended June 30. Sales (100k Units @ $10) =$1M, Cost of goods sold (100k @ $4.99) = 499k, Gross margin = 501k, Selling and admin exp = 260k, Operation income = 241k, Interest exp 2k, Net income = 239k

The Budgeted Balance Sheet

Royal reported the following account balances prior to preparing its budgeted financial statements:

  • Land – $50,000
  • Ordinary shares – $200,000
  • Retained earnings – $146,150 (April 1)
  • Equipment – $175,000

Royal Company Budget Balance Sheet June 30. Assets: Cash 43k, Accounts receivable 75k, raw materials inventory 4.6k, finished goods inventory 24,950, land 50k, equipment 367k, total assets 564,550. Liabilities and stockholders' equity: Accounts payable 28.4k, ordinary shares 200k, retained earnings 336,150, Total liabilities and stockholders' equity 564,550

Budgeting in an International Environment

Considerations:

  • Translating foreign currency
  • Predicting inflation rates and prices in unstable economies
  • Predicting sales in countries with different consumer preferences
  • Dealing with different labour laws, social customs, and norms affecting wage rates and worker productivity
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