ABC is a real-estate firm. One of its offices project that Year 2 quarterly sales will increase by 3 percent in Quarter 1, 3 percent in Quarter 2, 5 percent in Quarter 3, and 5 percent in Quarter 4. Management expects total operating expenses to be 85 percent of revenues during each of the first 2 quarters, 86 percent of revenues during the third quarter, and 81 percent during the fourth. The office manager expects to borrow $100,000 on July 1, with quarterly principal payments of $10,000 beginning on September 30 and interest paid at the annual rate of 12 percent. Year 1 last quarter sales were $520,000.

Required:

Prepare a budgeted income statement for each of the 4 quarters of Year 2 and for the entire year. Present the Year 2 budget as follows:

Quarter 1 Quarter 2 Quarter 3 Quarter 4 Full Year (Year 2)