Exercise 14-15A (Static) 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 Second Third Quarter Quarter Quarter Fourth Quarter Sales revenue $90,000 $100,000 $105,000 $130,000 Total $425,000 Cost of goods sold 54,000 60,000 63,000 78,000 255,000 Gross profit 36,000 40,000 42,000 52,000 170,000 Selling & administrative expenses Net income 8,500 $27,500 10,000 10,500 13,000 42,000 $ 30,000 $ 31,500 $ 39,000 $128,000 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 8 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. Sales revenue Cost of goods sold Gross profit Selling & administrative expenses Net income First Quarter Second Quarter Third Quarter Fourth Quarter Total