Problem 39_Noventis Corporation prepared the following estimates

 

     

      

 

    

 

  

 

  

 

 

        

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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.