Using the information given, construct a pro forma income statement for the final quarter of 2014 for Parker
The cash budget for Parker Process Meats, Inc. for the fourth quarter of 2014 is given below:
Parker Process Meats, Inc.
Cash Budget for the Three Months Ending December 31, 2014
Cash receipts Oct. Nov. Dec.
Total collections $31,050 $4,050 $49,950
Cash disbursements:
Purchases 44,550 48,600 52,650
Wages and salaries 7,425 7,425 7,425
Other expenses 2,025 1,350 675
Taxes 17,415
Total disbursements $54,000 $57,375 $78,165
The expected sales for the period are as follows:
Oct.: $86,400 Nov.: $91,800 Dec.: $83,700
The total depreciation expense for the period will be $8,775.
An interest payment on outstanding debt of $15,000 will be made in December.
Answer:
Parker Processed Meats, Inc.
Pro Forma Income Statement
For the Quarter Ended December 31, 2014
Sales $261,900
Less: cost of goods sold 145,800
Gross profits $116,100
Less:
Depreciation expense $8,775
Wages and salaries 22,275
Other expenses 4,050
Net operating income $81,000
Less: interest expense 15,000
Earnings before taxes $66,000
Less: income taxes 17,415
Net income $48,585
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