Salary expense was 15.5% of sales this year. If sales this year are $1,300,000 and are forecasted to be $1,400,000 next year, what is forecasted salary expense next year if all expenses maintain a constant percent of sales

$217,000

Explanation:

With regards to the above information, we can compute the forecasted salary expense next year by;

If salary expense is 15.5% of sales, then salary expense this year would be;

= 15.5% × $1,300,000

= $201,500

Salary expense next year would be

= 15.5% of forecasted sales next year

= 15.5% × $1,400,000

= $217,000

Forecasted salary expense next year would be $217,000 if all expenses maintain a constant percent of sales

The correct answer is (B) Income Summary

Explanation:

The income summary is a procedure that allows us to glimpse, globally, all the entries that existed in a period. It provides very valuable generalized information, which lets you know how business, work or some investment is going.

To ensure that our results are accurate, we must close all income and expense accounts, and take stock to obtain our conclusions. If the results have not been favorable, we must make the necessary adjustments so that in the next income summary we can obtain better results.