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Noventis Corporation prepared the following estimates for the four quarters of the current year: First Quarter Second Quarter Third Quarter Fourth Quarter Sales $ 1,425,000 $ 1,710,000 $ 1,995,000 $ 2,280,000 Cost of goods...

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Question

Finance

Noventis Corporation prepared the following estimates for thefour quarters of the current year:

First
Quarter		Second
Quarter		Third
Quarter		Fourth
Quarter
Sales$1,425,000$1,710,000$1,995,000$2,280,000
Cost of goods sold446,000526,000596,000646,000
Administrative costs440,000250,000255,000265,000
Advertising costs0120,00000
Executive bonuses00080,000
Provision for bad debts00090,000
Annual maintenance costs66,000000

Additional Information

  • First-quarter administrative costs include the $180,000 annualinsurance premium.
  • Advertising costs paid in the second quarter relate totelevision advertisements that will be broadcast throughout theentire year.
  • No special items affect income during the year.
  • Noventis estimates an effective income tax rate for the year of40 percent.

  1. Assuming that actual results do not vary from theestimates provided, determine the amount of net income to bereported each quarter of the current year.

  2. Assume that actual results do not vary from theestimates provided except for that in the third quarter, theestimated annual effective income tax rate is revised downward to38 percent. Determine the amount of net income to be reported eachquarter of the current year.

1
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
2
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr

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