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	$	172,000			$	202,000			$	212,000			$	262,000			$	848,000
Cost of goods sold		120,400				141,400				148,400				183,400				593,600
Gross profit		51,600				60,600				63,600				78,600				254,400
Selling & administrative expenses		17,200				20,200				21,200				26,200				84,800
Net income	$	34,400			$	40,400			$	42,400			$	52,400			$	169,600

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 15 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 10 percent.

Required

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

2. Prepare a pro forma income statement including quarterly budgets for the coming year using Ms. Banks 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

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

	First Quarter	Second Quarter	Third Quarter	Fourth Quarter	Total
Sales revenue
Cost of goods sold
Gross profit
Selling & administrative expenses
Net income