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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

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 $ 4,800
Accounts receivable 320,000
Inventory (January 1, Year 2) 192,000
Plant and equipment 520,000
Accumulated depreciation $ 164,000
Accounts payable 180,000
Notes payable (due within one year) 200,000
Accrued payables 93,000
Common stock 280,000
Retained earnings 432,800
Sales revenue 2,400,000
Other income 36,000
Manufacturing costs
Materials 852,000
Direct labor 872,000
Variable overhead 520,000
Depreciation 20,000
Other fixed overhead 31,000
Marketing
Commissions 80,000
Salaries 64,000
Promotion and advertising 180,000
Administrative
Salaries 64,000
Travel 10,000
Office costs 36,000
Income taxes
Dividends 20,000
$ 3,785,800 $ 3,785,800

Adjustments for the change in inventory and for income taxes have not been made. The scheduled production for this year is 450,000 units, and planned sales volume is 400,000 units. Sales and production volume was 300,000 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 $ 1,800,000
Other income 60,000 $ 1,860,000
Expenses
Cost of goods sold
Materials $ 528,000
Direct labor 540,000
Variable overhead 324,000
Fixed overhead 48,000
$ 1,440,000
Beginning inventory 192,000
$ 1,632,000
Ending inventory 192,000 $ 1,440,000
Selling
Salaries $ 54,000
Commissions 60,000
Promotion and advertising 126,000 240,000
General and administrative
Salaries $ 56,000
Travel 8,000
Office costs 32,000 96,000
Income taxes 33,600 1,809,600
Operating profit 50,400
Beginning retained earnings 402,400
Subtotal $ 452,800
Less dividends 20,000
Ending retained earnings $ 432,800

Required:

Prepared a budgeted income statement and balance sheet.

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