Noventis Corporation prepared the following estimates for the four quarters of t

Question

Noventis Corporation prepared the following estimates for the four quarters of the current year: Third Quarter First Second Quarter Fourthh Quarter Quarter $ 1,550,000 1,860,000 2,170,000 2,480,000 655,000 225,000 Sales Cost of goods sold Administrative costs Advertising costs Executive bonuses Provision for bad debts Annual maintenance costs 455,000 360,000 535,000 210,000 200,000 605,000 215,000 96,000 74,000 82,000 Additional Information First-quarter administrative costs include the $100,000 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

Explanation / Answer

Workings:

a.

Net Income a. 1st Quarter $ 406,800 2nd Quarter 624,000 3rd Quarter 765,000 4th Quarter 813,000 b. 1st Quarter $ 406,800 2nd Quarter 624,000 3rd Quarter 790,500 4th Quarter 1,180,460

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