Steven Bragg of Accounting Tools defines a budgeted income statement as follows:
The budgeted income statement contains all of the line items found in a normal income statement, except that it is a projection of what the income statement will look like during future budget periods. It is compiled from a number of other budgets, the accuracy of which may vary based on the realism of the inputs to the budget model. (2016, para. 1)
The information available for The Unknown Comic's budgeted income statement, as well as the statement itself, is shown below.
| Total sales in dollars | $195,000 | (from sales budget) |
| Beginning finished goods inventory | $6,170 | (last year's finished goods inventory) |
| Cost of goods manufactured | $79,000 | (from cost of goods manufactured budget) |
| Ending finished goods inventory | $6,170 | (see calculation below) |
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ending finished goods inventory in units x cost per unit to produce
500 units x $12.34 per unit = $6,170 |
It is very unlikely that the dollar amounts for beginning and ending finished goods inventory would be the same. Income tax expense was ignored for this example.
| Total selling expenses | $43,750 | (from selling and administrative expenses budget) |
| Total administrative expenses | $32,750 | (from selling and administrative expenses budget) |
| Interest expense | $5,250 | (provided by company) |
| Income tax expense | $0 | (Income taxes were ignored for this example) |
| Sales |
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| $195,000 |
| Cost of goods sold |
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Beginning inventory, finished goods
| $6,170 |
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Cost of goods manufactured
| $79,000 |
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Cost of goods available for sale
| $85,170 |
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Ending inventory, finished goods
| $6,170 |
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| Cost of goods sold |
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| $79,000 |
| Gross profits |
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| $116,000 |
| Selling and administrative expenses: |
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Selling expenses
| $43,750 |
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Administrative expenses
| $32,750 |
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| Total selling and administrative expenses |
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| $76,500 |
| Operating income |
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| $39,500 |
| Interest expense |
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| $5,250 |
| Income before taxes |
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| $34,250 |
| Income tax expense |
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| $0 |
| Net income |
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| $34,250 |
Bragg, S. (2016). Budgeted income statement. In Accounting tools: Budgeting topics. Retrieved from http://www.accountingtools.com/budgeted-income-statement