The Northeast Regional Division of Union Corp. has been requested to prepare a quarterly budgeted income statement for 2022. The regional manager expects that sales in the first quarter of 2022 will increase by 10% over the same quarter of the preceding year and will then increase by 5% for each succeeding quarter in 2022.

The corporate head office has requested that the regional manager maintain an inventory in dollars equal to 25% of the next quarter's sales. Quarterly purchases average 55% of quarterly sales. Budgeted ending inventory on December 31, 2021 is $176,000. Quarterly salaries are $20,000 plus 5% of sales. All salaries are classified as sales salaries. Other quarterly expenses are estimated to be as follows:

Rent expense $24,000

Depreciation on office equipment $12,000

Utilities expense $3,600

Miscellaneous expenses 2% of sales

The income statement for the first quarter of 2021 was as follows:

Income Statement

For the Quarter Ended March 31, 2021

Sales........................................................................................................ $720,000

Cost of goods sold................................................................................... 396,000

Gross profit.............................................................................................. 324,000

Operating expenses

Sales salaries................................................................................... $52,000

Rent expense................................................................................... 24,000

Depreciation..................................................................................... 12,000

Utilities.............................................................................................. 3,600

Miscellaneous................................................................................... 12,800

Total operating expenses.......................................................... 104,400

Net income.............................................................................................. $219,600

Instructions

Prepare a budgeted quarterly income statement form for the first quarter of 2022. (Show computations.)