Produce budgeted income statements

From the following information, prepare a financial model that would produce budgeted income

statements and statements of retained earnings for the 5 years 20X2 to 20X6 for Unique Traders Ltd

All necessary calculations should be performed by the computer

Unique trades in one product only In 20X1 sales were 30 000 units and volume is expected to

increase by 8% each year (compound) to a maximum of 40 000 units per year

Unit selling price in the years 20X2, 20X3, 20X4 is expected to equal the unit cost of purchases made

in the year, marked up by 30% whilst in 20X5 and 20X6 the mark-up is expected to be 35% on

purchase cost

Unit purchase costs for the 5 years are estimated at 20X2 $510, 20X3 $536, 20X4 $568, 20X5 $602,

20X6 $650

Closing inventory is to be 15% of estimated sales units for the following year Closing inventory for

20X1, however, was only 3600 units valued at $17 640 Assume a FIFO cost flow

General and administrative expenses are expected to equal 14% of sales revenue in each year

The tax rate is expected to be 40%

Provide for dividends equal to 65% of after tax profit

Retained earnings at the end of 20X1 amounted to $3500

Solution:

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