Jim Denty, the controller of Grime Corporation, is trying to prepare a sales budget for the coming year. The income statements for the last four quarters follow.

Historically, cost of goods sold is about 60 percent of sales revenue. Selling and administrative expenses are about 10 percent of sales revenue.
Gene Moreno, the chief executive officer, told Mr. Denty that he expected sales next year to be 10 percent above last year's level. However, Sarah Toole, the vice president of sales, told
Mr. Denty that she believed sales growth would be only 5 percent.
Required
a. Prepare a pro forma income statement including quarterly budgets for the coming year using Mr. Moreno's estimate.
b. Prepare a pro forma income statement including quarterly budgets for the coming year using Ms. Toole's estimate.
c. Explain why two executive officers in the same company could have different estimates of futuregrowth.

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First Quarter Second Quarter Third Quarter Fourth Quarter Total Sales revenue Cost of goods sold Gross profit Selling & admin, expense Net income S170,000 $200,000 $210,000 260,000 S840,000 126,000 102,000 120,000 80,000 20,000 68,000 17,000 84,000 21,000 156,000 104,000 26,000 504,000 336,000 84,000 S 51,000 S 60,000 S 63,000 78,000 $252,000