E22-32. Budgeted Income Statement Quality Wool Company, a merchandising company, is developing its master budget for next year. The income statement for the current year is as follows: QUALITY WOOL COMPANY Income Statement For Year Ending December 31 Gross sales. . . . $1,200,000 Less uncollectible accounts . . (26,000) Collected sales . . . 1,174,000 Cost of goods sold . . . (780,000) Profit before operating expense . . . . . 394,000 Operating expenses (including $15,000 depreciation) . (206,000) Income before tax. . . . 188,000 The following are management's goals and forecasts for next year: 1. Selling prices will increase by 3%, and sales volume will increase by 5%. 2. The cost of merchandise will increase by 2%. 3. All operating expenses are fixed. Price increases for operating expenses will be 4%. The company uses straight-line depreciation. 4. The estimated uncollectibles are 2% of budgeted sales. Required Prepare a budgeted functional income statement for next year