Estimated Financial Statements. Ranval Fasteners, Inc. has budgeted operations for each quarter of 1998 as follows:

All production costs and operating expenses with the exception of depreciation are to be paid during the quarter incurred. Each quarter, depreciation expenses included in production costs and in operating expenses are $40,000 and $20,000, respectively.
Collections on sales are planned at 60 percent during the quarter of the sale and 40 percent during the quarter following the sale. Materials are purchased as needed in production and are not held in inventory. Income tax is estimated at 40 percent of income before income tax and is paid during the subsequent quarter.
Dividends of $100,000 are to be paid in June and again in December if covered by sufficient profits. No dividends will be paid if the profits for the year are expected to be less than $300,000.
A summary balance sheet at December 31, 1997, shows:

Required:
1. Prepare an estimated income statement for each quarter and for the year.
2. Prepare a balance sheet at the end of each quarter of 1998.
3. Comment on changes in assumptions that might endanger the dividend payments.

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First quarter Second quarter. Third quarter. Fourth quarter First quarter, 1999..... Net Sales Production Costs Operating Expenses $750,000 $480,000 $145,000 800,000 500,000 850,000 520,000 160,000 170,000 900,000 500,000 175,000 800,000 520,000 170,000 Forecast finished goods inventory is planned as follows: March 31......... June 30... $135,000 130,000 September 30 December 31 $140,000 125,000