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: Sales revenue Cost of goods sold Gross profit Selling & administrative expenses Net income $ 205,000 (143,500) 61,500 (20,500) First Quarter Second Quarter Third Quarter Fourth Quarter $ 175,000 (122,500) 52,500 (17,500) $ 215,000 (150,500) 64,500 (21,500) $ 265,000 (185,500) 79,500 (26,500) Total $ 860,000 (602,000) 258,000 (86,000) $ 35,000 $ 41,000 $ 43,000 $ 53,000 $ 172,000 Historically, cost of goods sold is about 70 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. Answer is complete but not entirely correct. 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 Ms. Banks' estimate. First Quarter Second Quarter Fourth Third Quarter Total Sales revenue $ Cost of goods sold Gross profit Selling & administrative expenses 192,500 (134,750) 57,750 (19,250) x $ 225,500 $ 236,500 $ (157,850) (165,550) Quarter 291,500 $ (204,050) X 946,000 (662,200) 67,650 (22,550) x Net income $ 38,500 $ 45,100 $ 70,950 (23,650) X 47,300 87,450 283,800 (29,150) x (94,600) $ 58,300 $ 189,200 < Required A Required B >