Exercise 14-15A (Algo) Preparing pro forma income statements with different assumptions LO 14-6 Jacob Long, the controller of Arvada Corporation, is trying to prepare a sales budget for the coming year. The income statements for the last four quarters follow: First Quarter Second Third Quarter Quarter Fourth Quarter Total Sales revenue Cost of goods sold) $179,000 $209,000 $219,000 $269,000 $876,000 107,400 125,400 131,400 161,400 525,600 Gross profit 71,600 selling & administrative expenses Net income 17,900 83,600 20,900 87,600 21,900 107,600 350,400 26,900 87,600 $ 53,700 $ 62,700 $ 65,700 $ 80,700 $262,800 Historically, cost of goods sold is about 60 percent of sales revenue. Selling and administrative expenses are about 10 percent of sales revenue. Fred Arvada, the chief executive officer, told Mr. Long that he expected sales next year to be 10 percent for each respective quarter above last year's level. However, Rita Banks, the vice president of sales, told Mr. Long 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. Arvada's estimate. b. Prepare a pro forma income statement including quarterly budgets for the coming year using Ms. Banks estimate. Complete this question by entering your answers in the tabs below. Required A Required B Prepare a pro forma income statement including quarterly budgets for the coming year using Mr. Arvada's estimate. First Quarter Second Quarter Sales revenue Cost of goods sold Gross profit 0 0 Selling & administrative expenses Net income $ 0 $ 0 $ Fourth Quarter Total $ 0 0 0 0 0 0 $ 0 $ 0