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 Quarter				Third Quarter				Fourth Quarter				Total
Sales revenue	$	188,000			$	218,000			$	228,000			$	278,000			$	912,000
Cost of goods sold		112,800				130,800				136,800				166,800				547,200
Gross profit		75,200				87,200				91,200				111,200				364,800
Selling & administrative expenses		18,800				21,800				22,800				27,800				91,200
Net income	$	56,400			$	65,400			$	68,400			$	83,400			$	273,600

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 years level. However, Rita Banks, the vice president of sales, told Mr. Long that she believed sales growth would be only 5 percent.

Required

1. Prepare a pro forma income statement including quarterly budgets for the coming year using Mr. Arvadas estimate.

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

	First Quarter	Second Quarter	Third Quarter	Fourth Quarter	Total
Sales revenue
Cost of goods sold
Gross profit
Selling & administrative expenses
Net income					b. Prepare a pro forma income statement including quarterly budgets for the coming year using Ms. Banks estimate.