United Mobile Corporation appeared to be experiencing a good year. First quarter sales were one-third ahead of last year and the sales department predicted that this rate would continue throughout the year. The controller asked Megan Casey, a summer accounting intern, to draft a forecast for the year and analyze the differences from last year's results. She based the forecast on first quarter results plus the expected production costs forthe remainder of the year. She worked with production, sales, and other department heads to get the necessary information. The results of these efforts follow:

UNITED MOBILE CORPORATION

Expected Account Balances for December 31, Year 2

Cash

$5,280

Accounts Receivable

352,000

Inventory (January 1, year two)

211,200

Plant and Equipment

572,000

Accumulated Depreciation

$180,400

Accounts Payable

198,000

Notes Payable(due within one year)

220,000

Accrued Payables

102,300

Common Stock

308,000

Retained Earnings

476,080

Sales Revenue

2,640,000

Other Income

39,600

Manufacturing Costs

Materials

937,200

Direct Labor

959,200

Variable Overhead

572,000

Depreciation

22,000

Other Fixed Overhead

34,100

Marketing

Commissions

88,000

Salaries

70,400

Promotion and Advertising

198,000

Administrative

Salaries

70,400

Travel

11,000

Office Costs

39,600

Income Taxes

Dividends

22,000

$4,164,380

$4,164,380

Adjustments for the change in inventory and for income taxes have not been made. The scheduled production for this year is 495,000 units and planned sales volume is 440,000 units. Sales and production volume was 330,000 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:

UNITED MOBILE CORPORATION

Statement of Income and Retained Earnings

For the Budget Year Ended December 31, Year 1

Revenues

Sales Revenue

$1,980,000

Other Income

66,000

$1,860,000

Expenses

Cost of Goods Sold

Materials

$580,800

Direct Labor

594,000

Variable Overhead

356,400

Fixed Overhead

52,800

$1,584,000

Beginning Inventory

211,200

$1,795,200

Ending Inventory

211,200

$1,584,000

Selling

Salaries

$59,400

Commissions

66,000

Promotion and Advertising

138,600

264,000

General and Administrative

Salaries

$61,600

Travel

8,800

Office Costs

35,200

105,600

Income Taxes

36,960

1,990,560

Operating Profit

55,440

Beginning Retained Earnings

442,640

Subtotal

$498,080

Less Dividends

22,000

Ending Retained Earnings

$476,080

Complete the following:

Prepared a budgeted income statement and balance sheet.