Page 167 - Budgeting for Managers

Budgeting for Managers
150
Income and Expenses, Jan 1–Dec 31, 200x
Gross Sales
Cost of Goods Sold
$150,000
Net Sales $250,000
$100,000
Expenses
Rent $6,000
Electricity $3,600
Telephone $1,500
Total Expenses $11,100
Depreciation $50,000
Total Expenses & Depreciation $61,100
Earnings before Taxes $38,900
Taxes $15,560
Net Income $23,340
Table 9-7. An income and expense statement
plies, looking for bulk discounts to reduce costs.
• Resolving vendor problems. If inventories are low or
we’ve returned a significant number of items, that may
indicate that our vendors are having trouble getting us
what we need on time and with sufficient quality. We can
address these issues with the vendors or look for new
vendors.
• Resolving customer account problems. If our aging state-
ment shows that some customers owe us money past
due, we should discuss this with them. If this happens
consistently, we may want to change our policy toward
customers. For example, we can offer accounts to fewer
customers and take credit cards for payment so that we
get payment when services are delivered.
As you can see, closing the books and preparing financial
statements are more than just bookkeeping chores. They allow us
to check the pulse of our business so that we can plan our work.