Daniel Singh, the controller of Meier Corporation, is trying to prepare a sales budget for the coming year. The income statements for the last four quarters follow.

		First			Second			Third			Fourth
	Quarter			Quarter			Quarter			Quarter			Total
Sales revenue	$	180,000		$	200,000		$	210,000		$	260,000		$	850,000
Cost of goods sold		108,000			120,000			126,000			156,000			510,000
Gross profit		72,000			80,000			84,000			104,000			340,000
Selling & admin. expenses		17,000			20,000			21,000			26,000			84,000
Net income	$	55,000		$	60,000		$	63,000		$	78,000		$	256,000

Historically, cost of goods sold is about 60 percent of sales revenue. Selling and administrative expenses are about 10 percent of sales revenue.

Joe Meier, the chief executive officer, told Mr. Singh that he expected sales next year to be 8 percent for each respective quarter above last years level. However, Ashley Odom, the vice president of sales, told Mr. Singh 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. Meiers estimate.

	First Quarter	Second Quarter	Third Quarter	Fourth Quarter	Total
Sales Revenue					$
Cost of goods sold					$
Gross Profit					$
Selling & admin. expenses					$
Net income	$	$	$	$	$

b.

Prepare a pro forma income statement including quarterly budgets for the coming year using Ms. Odoms estimate.

	First Quarter	Second Quarter	Third Quarter	Fourth Quarter	Total
Sales Revenue					$
Cost of goods sold					$
Gross Profit					$
Selling & admin. expenses					$
Net income	$	$	$	$	$