Problem 39_Noventis Corporation prepared the following estimates

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Description

Segment interim reporting
Problem 39
Noventis Corporation prepared the
following estimates for the four quarters of the current year:
First Qt Second QT Third qt Fourth QT
Sales 10,00,000.00 12,00,000.00 14,00,000.00 16,00,000.00
COGS 4,00,000.00 4,80,000.00 5,50,000.00 6,00,000.00
Admisnitrative costs 2,50,000.00 1,55,000.00 1,60,000.00 1,70,000.00
Advertising cost 1,00,000.00
executive bonuses 80,000.00
Provision for bad debts 52,000.00
Annual maintenance costs 60,000.00
Aditional
information
1) First quarter admisnitrative
costs include 100,000 annual insurance premium
2) Advertisement costs paid in the
second quarter relate to television advertisements
that will be broadcast throughout
the entire year.
3) No special items affect income
during the year.
4) Noventis estimates an effective
income tax rate for the year of 40%
a) Assuming that actual results do
not vary from the estimates provided, determine
the amount of income to be reported
each quarter of the current year.
b) Assume that actual results do not
vary from the estimates provided except for that in the third
quarter, the estimated annual
effective income tax rate is revised downward to 38%.
Determine the amount of income to be
reported each quarter of the current year.

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