Comprehensive Budget Plan: C. L. Corporation appeared to be experiencing a good year. Sales in the first quarter were one third ahead of last year, and the sales department predicted that this rate would continue throughout the entire year. Ruth Keenan, assistant controller, was asked to prepare a new forecast for the year and to analyze the differences from last year's results. The forecast was to be based on actual results obtained in the first quarter plus the expected costs of programs to be carried out in the remainder of the year. She worked with various department heads (production, sales, and so on) to get the necessary information. The results of these efforts are presented below.

Adjustments for the change in inventory and for income taxes have not been made. The scheduled production for this year is 450 million units, and planned sales volume is 400 million units. Sales and production volume was 300 million units last year. A full-absorption cost, FIFO inventory system is used. The company is subject to a 40 percent income tax rate. The actual income statement for last year is presented below:

Required: Prepare a budgeted income statement and balance sheet.

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C. L. CORPORATION Expected Account Balances for December 31, This Year (in thousands) Cash Accounts Receivable Inventory (January 1, next year) Plant and Equipment Accounts Payable $ 1,200 80,000 48,000 130,000 Accumulated Depreciation Notes Payable (due within one year) Accrued Payables $ 41,000 45,000 50,000 23,250 Common Stock 70,000 Retained Earnings 108,200 Sales 600,000 Other Income 9,000 Manufacturing costs: Materials 213,000 Direct Labor 218,000 Variable Overhead 130,000 Depreciation 5,000 Other Fixed Overhead 7,750 Marketing: Commissions 20,000 Salaries 16,000 Promotion and Advertising 45,000 Administrative: Salaries 16,000 Travel 2,500 Office Costs 9,000 Income Taxes Dividends 5,000 $946,450 $946,450