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 Fourth Quarter Quarter Quarter Sales revenue $175,000 $205,000 $215,000 $265,000 Total $860,000 Cost of goods sold 87,500 102,500 107,500 132,500 430,000 Gross profit 87,500 ces Selling & administrative expenses 17500 Net income $ 70,000 102,500 20,500 $ 82,000 107,500 132,500 430,000 21,500 26,500 86,000 $ 86,000 $106,000 $344,000 Historically, cost of goods sold is about 50 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. Sales revenue Cost of goods sold Gross profit Selling & administrative expenses Net income Second Fourth First Quarter Third Quarter Total Quarter Quarter ces Sales revenue Cost of goods sold Gross profit Selling & administrative expenses Net income Second First Quarter Third Quarter Fourth Quarter Total Quarter