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 First Quarter $177,000 88,500 88,500 17,700 $ 70,800 Second Quarter $207,000 103,500 103,500 20.700 $ 82,800 Third Quarter $217,000 108,500 108,500 21,200 $ 86,800 Fourth Quarter $267,000 133,500 133,500 26,700 $106,800 Total $868,000 434,000 434,000 86,800 $347,200 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 belleved sales growth would be only 5 percent Required a. Prepare a pro forma income statement including quarterly budgets for the coming year using Mr. Arvade'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 First Quarter Second Quarter Third Quarter Fourth Quarter Total Sales revenue Cost of goods sold Gross profit Selling & administrative expenses Not income RA Required 8 > 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 First Quarter $177,000 88,500 88,500 17,700 $ 70, 800 Second Quarter $207,000 103,500 103,500 20,200 $ 62,800 Third Quarter $217,000 208,500 108,500 21,700 5 86,800 Fourth Quarter $267,000 133,500 133,500 26,700 $106,800 Total $868,000 434,000 434,000 36,800 $347,200 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 belleved 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. a 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 Fourt Third Quarter Quarter Total Quarter Sales revenue Cost of goods sold Gross profit Selling & administrative expenses Net Income
