Red Canyon T-shirt Company operates a chain of T-shirt shops in the southwestern United States. The sales manager has provided a sales forecast for the coming year, along with the following information:

Quarter 1 Quarter 2 Quarter 3 Quarter 4 Budgeted unit sales 39,000 59,000 29,500 59,000

Each T-shirt is expected to sell for $14. The purchasing manager buys the T-shirts for $6 each. The company needs to have enough T-shirts on hand at the end of each quarter to fill 24 percent of the next quarters sales demand. Selling and administrative expenses are budgeted at $78,000 per quarter plus 16 percent of total sales revenue.

Required: 1. Determine budgeted sales revenue for quarters 1, 2, and 3. 2. Determine budgeted cost of merchandise purchased for quarters 1, 2, and 3. 3. Determine budgeted cost of good sold for quarters 1, 2, and 3. 4. Determine selling and administrative expenses for quarters 1, 2, and 3. 5. Complete the budgeted income statement for quarters 1, 2, and 3.