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 $180,000 126,000 54,000 18,000 $ 36,000 Second Quarter $210,000 147,000 63,000 21,000 $ 42,000 Quarter $220,000 154,000 66,000 22,000 $ 44,000 Fourth Q uarter $270,000 189,000 81,000 27,000 $ 54,000 Total $800,000 616,000 264,000 80,000 $176,000 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 15 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 10 percent Required a. Prepare a pro forma income statement including quarterly budgets for the coming year using Mc Arvada's estimate b. Prepare a pro forma income statement including quarterly budgets for the coming year using Ms. Banks's 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 Net Income 0 0 0 $ 0 $ 0 $ Required 8 > Uus JUU 15 Uuut / 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 year's level. However, Rita Banks, the vice president of sales, told Mr. Long that she believed sales growth would be only 10 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's 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 Ms. Banks's estimate. First Quarter Second Quarter Third Quarter Fourth Quarter Total Sales revenue Cost of goods sold Gross profit Selling & administrative expenses Net income 0 0 S 0S 0S 0S 0S 0 Required A Required )
