First Quarter Second Quarter Fourth Quarter Third Quarter Sales.... Cost of goods sold Administrative costs.... Advertising costs... Executive bonuses Provision for bad debts... Annual maintenance costs. $1,300,000 $1,560,000 510,000 $2,080,000 630,000 200,000 -0- 76,000 64,000 $1,820,000 190,000 310,000 100,000 -0- -0- -0- -0- -0- -0- -0- 72,000 -0- -0- -0-

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Noventis Corporation prepared the following estimates for the four quarters of the current year:
Additional Information
• First-quarter administrative costs include the $160,000 annual insurance premium.
• Advertising costs paid in the second quarter relate to television advertisements that will be broadcast throughout the entire year.
• No special items affect income during the year.
• Noventis estimates an effective income tax rate for the year of 40 percent.
a. Assuming that actual results do not vary from the estimates provided, determine the amount of net 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 percent. Determine the amount of net income to be reported each quarter of the current year.

First
Quarter
Second
Quarter
Fourth
Quarter
Third
Quarter
Sales....
Cost of goods sold
Administrative costs....
Advertising costs...
Executive bonuses
Provision for bad debts...
Annual maintenance
costs.
$1,300,000
$1,560,000
510,000
$2,080,000
630,000
200,000
-0-
76,000
64,000
$1,820,000
190,000
310,000
100,000
-0-
-0-
-0-
-0-
-0-
-0-
-0-
72,000
-0-
-0-
-0-
Transcribed Image Text:First Quarter Second Quarter Fourth Quarter Third Quarter Sales.... Cost of goods sold Administrative costs.... Advertising costs... Executive bonuses Provision for bad debts... Annual maintenance costs. $1,300,000 $1,560,000 510,000 $2,080,000 630,000 200,000 -0- 76,000 64,000 $1,820,000 190,000 310,000 100,000 -0- -0- -0- -0- -0- -0- -0- 72,000 -0- -0- -0-
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