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 35,000 55,000 27,500 55,000 Budgeted unit sales Each T-shirt is expected to sell for $10. The purchasing manager buys the T-shirts for $4 each. The company needs to have enough T-shirts on hand at the end of each quarter to fill 20 percent of the next quarter's sales demand. Selling and administrative expenses are budgeted at $70,000 per quarter plus 12 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. Determine budgeted sales revenue for each quarter. Quarter 1 Quarter 2 Quarter 3 Budgeted Sales Revenue Determine budgeted cost of merchandise purchased for each quarter. Quarter 1 Quarter 2 Quarter 3 Budgeted Cost of Merchandise Purchased Determine budgeted cost of good sold for each quarter. Quarter 1 Quarter 2 Quarter 3 Budgeted Cost of Goods Sold Determine selling and administrative expenses for each quarter. Quarter 1 Quarter 2 Quarter 3 Budgeted Selling and Administrative Expenses Complete the budgeted income statement for each quarter. RED CANYON T-SHIRT COMPANY Budgeted Income Statement Quarter 1 Quarter 2 Quarter 3 Budgeted Gross Margin Budgeted Net Operating Income