Bill Thomas, Bates & Hills controller, has received all the budgets prepared by the various operating units and is ready to compile the pro-forma financial statements for the first quarter. The companys balance sheet of December 31 is as follows: Cash $ 44,400 Accounts Receivable (net) 43,290 Finished Goods Inventory 36,260 Raw Materials Inventory 5,594 Property, Plant & Equipment 222,000 Accumulated Depreciation (55,500 ) Total Assets $296,044 Accounts Payable $ 13,320 Income Tax Payable 55,692 Common Stock 74,000 Retained Earnings 153,032 Total Liabilities & Owners Equity $296,044 Quarter Budgeted revenue $1,043,400 Selling and administrative expense 197,136 Interest expense 2,501 Cash 22,774 Cost of Goods Sold 742,494 Accounts receivable 101,010 Direct materials 4,114 Finished goods 43,671 Acounts payable 24,568 Notes payable 30,340 Additional Information:

Bates & Hill plans to declare and pay dividends totaling $36,260 in January. Bates & Hill plans to purchase and pay cash for a piece of land in February at a cost of $53,280. Bates & Hill plans to purchase equipment in March at a cost of $44,400. Depreciation for manufacturing overhead $22,200 per month and for selling and administrative $7,400 per month.

The company expects a 22% income tax rate, and all quarterly taxes are paid in the first month of the following quarter. Collapse question part

(a) Prepare Bates & Hills pro-forma income statement for the first quarter.

Pro-forma Income Statement Income

Tax ExpenseInterest ExpenseSelling & Administrative ExpenseCost of Goods SoldSales RevenueIncome Before Taxes $ Selling & Administrative ExpenseIncome Tax ExpenseInterest ExpenseSales RevenueCost of Goods SoldIncome Before Taxes Gross MarginNon-Operating ExpensesOperating Income / (Loss)Net Income / (Loss)Non-Operating Income / (Loss) Sales RevenueIncome Tax ExpenseCost of Goods SoldSelling & Administrative ExpenseInterest ExpenseIncome Before Taxes Non-Operating Income / (Loss)Net Income / (Loss)Non-Operating ExpensesGross MarginOperating Income / (Loss) Sales RevenueSelling & Administrative ExpenseInterest ExpenseCost of Goods SoldIncome Before TaxesIncome Tax Expense Income Tax ExpenseSelling & Administrative ExpenseSales RevenueCost of Goods SoldInterest ExpenseIncome Before Taxes Selling & Administrative ExpenseCost of Goods SoldIncome Before TaxesInterest ExpenseIncome Tax ExpenseSales Revenue Non-Operating Income / (Loss)Non-Operating ExpensesNet Income / (Loss)Gross MarginOperating Income / (Loss) $