Solaris Corporation prepared the following estimates for the four quarters of the current year:

First Second Third Fourth

Quarter Quarter Quarter Quarter

Sales $1,250,000 $1,500,000 $1,750,000 $2,000,000

Cost of goods sold $425,000 $505,000 $575,000 $625,000

Administrative costs $300,000 $180,000 $185,000 $195,000

Advertising costs $0 $200,000 $0 $0

Executive bonuses $0 $0 $0 $72,000

Provision for bad debts $0 $0 $0 $62,000

Annual maintenance costs $70,000 $0 $0 $0

Additional Information

First-quarter administrative cost include the $150,000 annual insurance premium.

Advertising cost aid in the second quarter relate to television advertisements that will b broadcast through the entire year.

No special items affect income during the year.

The company estimates an effective income tax rate for the year of 25 percent.

a. Assuming that actual results do not vary from the estimates provided, determine the amount of net income to be reported each quarter of the current year.

b. Assume that actual results do not vary from the estimates provided except for that in the third quarter, the estimated annual effective income tax rate is revised downward to 22 percent.

Determine the amount of net income to be reported each quarter of the current year.

Period Net Income

a 1st Quarter ______________

2nd Quarter ______________

3rd Quarter _______________

4th Quarter _______________

b

1st Quarter ______________

2nd Quarter ______________

3rd Quarter ______________

4th Quarter _______________