The cash budget for Parker Processed Meats, Inc. is given below for the fourth quarter of 2010:
Parker Processed Meats, Inc.
Cash Budget for the Three Months Ending December 31, 2010
Cash receipts Oct. Nov. Dec.
Total collections $37,050 $48,075 $69,750
Cash disbursements:
Purchases $45,780 $50,800 $54,250
Wages and salaries $8,500 $8,500 $8,500
Other expenses $4,025 $2,350 $975
Taxes $16,350
Total disbursements $54,000 $57,375 $78,165
The expected sales for the period are as follows:
Oct.: $116,000 Nov.: $127,000 Dec.: $95,000
The total depreciation expense for the period will be $12,000.
An interest payment on outstanding debt of $13,000 will be made in December. Using the information given
above, construct a pro forma income statement for the final quarter of 2010.
Parker Processed Meats, Inc.
Pro Forma Income Statement
For the Quarter Ended December 31, 2008
Sales $338,000
Less: Cost of goods sold $150,830
Gross profits $187,170
Less:
Depreciation expense $12,000
Wages and salaries $25,500
Other expenses $7,350
Net operating income $142,320
Less: interest expense $13,000
Earnings before taxes $129,320
Less: Income taxes $16,350
Net income $112,970
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