problem 39 noventis corporation prepared the following estimates 500849
Aug 29, 2021 | Uncategorized
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. |