Panther Corporation appeared to be experiencing a good year. Sales in the first quarter were one-third ahead of last year, and the sales department predicted that this rate would continue throughout the entire year. The controller asked Janet Nomura, a summer accounting intern, to prepare a draft forecast for the year and to analyze the differences from last year's results. She based the forecast on actual results obtained in the first quarter plus the expected costs of production to be completed in the remainder of the year. She worked with various department heads (production, sales, and so on) to get the necessary information. The results of these efforts follow:

PANTHER CORPORATION Expected Account Balances for December 31, Year 2
Cash	$	6,800
Accounts receivable		340,000
Inventory (January 1, Year 2)		300,000
Plant and equipment		620,000
Accumulated depreciation				$	184,000
Accounts payable					200,000
Notes payable (due within one year)					220,000
Accrued payables					113,000
Common stock					480,000
Retained earnings					715,800
Sales revenue					2,600,000
Other income					76,000
Manufacturing costs
Materials		923,000
Direct labor		974,000
Variable overhead		710,000
Depreciation		40,000
Other fixed overhead		51,000
Marketing
Commissions		120,000
Salaries		84,000
Promotion and advertising		220,000
Administrative
Salaries		84,000
Travel		20,000
Office costs		56,000
Income taxes
Dividends		40,000
	$	4,588,800		$	4,588,800

Adjustments for the change in inventory and for income taxes have not been made. The scheduled production for this year is 380,000 units, and planned sales volume is 350,000 units. Sales and production volume was 250,000 units last year. The company uses a full-absorption costing and FIFO inventory system and is subject to a 40 percent income tax rate. The actual income statement for last year follows:

PANTHER CORPORATION Statement of Income and Retained Earnings For the Budget Year Ended December 31, Year 1
Revenues
Sales revenue				$	1,980,000
Other income					98,000		$	2,078,000
Expenses
Cost of goods sold
Materials	$	572,000
Direct labor		600,000
Variable overhead		260,000
Fixed overhead		68,000
	$	1,500,000
Beginning inventory		300,000
	$	1,800,000
Ending inventory		300,000		$	1,500,000
Selling
Salaries	$	74,000
Commissions		80,000
Promotion and advertising		146,000			300,000
General and administrative
Salaries	$	76,000
Travel		17,500
Office costs		52,000			145,500
Income taxes					53,000			1,998,500
Operating profit								79,500
Beginning retained earnings								676,300
Subtotal							$	755,800
Less dividends								40,000
Ending retained earnings							$	715,800

Required:

Prepared a budgeted income statement and balance sheet.

PANTHER CORPORATIONBudgeted Income StatementFor the Year Ended December 31, Year 2Revenue:Sales revenueOther incomeTotal Revenue$0Expenses:Cost of goods manufactured & sold:MaterialsDirect laborVariable overheadFixed overheadBeginning inventory0Ending inventoryMarketing:SalariesCommissionsPromotions and advertisingAdministrative:SalariesTravelOffice costsIncome taxes (credit)Total expensesOperating profit (loss)$0

PANTHER CORPORATIONBudgeted Balance SheetBudgeted December 31, Year 2Current AssetsTotal current assets$0Total assets$0Current liabilitiesTotal current liabilities$0Shareholders equityTotal shareholders equity0Total liabilities and shareholders equity$0