Transcribed Image Text: PROBLEM 7-F BUDGETED NET INCOME Reima Inc. 2016 income statement is presented below. Sales P3,500,000 Operating Costs 2,500,000 Earnings before interest and taxes P1,000,000 Interest expense 200,000

Transcribed Image Text: PROBLEM 7-F BUDGETED NET INCOME
Reima Inc. 2016 income statement is presented below.
Sales
P3,500,000
Operating Costs
2,500,000
Earnings before interest and taxes
P1,000,000
Interest expense
200,000
Earnings before taxes
P800,000
Income tax (40%)
320,000
Net Income
P480,000
Dividends (40%)
Addition to retained earnings
P192,000
P288,000
For 2017, the firm is forecasting a 40% increase in sales and that its year end operating
costs will decline to 60% of sales. Tax rate, interest expense and dividend payout ratio are expected
to remain constant.
Required:
is the projected 2017 net income?
IVERSI

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