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cob Long, the controller of Arvada Corporation, is trying to prepare a sales budget for the coming year. The income statements fo the last four quarters follow: First Quarter Second Quarter Third Quarter Fourth Quarter Sales revenue Cost of goods sold Gross profit Selling & administrative expenses Net income Total $186,000 $216,000 $226,000 $276,000 $ 904,000 111,600 129,600 135,600 165,600 542,400 74,400 86,400 90,400 110,400 361,600 18,600 21,600 22,600 27,600 98,400 $ 55,800 $ 64,800 $ 67,800 $ 82,800 $ 271,200 Historically, cost of goods sold is about 60 percent of sales revenue. Selling and administrative expenses are about 10 percent of sa revenue. Fred Arvada, the chief executive offic

cob Long, the controller of Arvada Corporation, is trying to prepare a sales budget for the coming year. The income statements fo the last four quarters follow: First Quarter Second Quarter Third Quarter Fourth Quarter Sales revenue Cost of goods sold Gross profit Selling & administrative expenses Net income Total $186,000 $216,000 $226,000 $276,000 $ 904,000 111,600 129,600 135,600 165,600 542,400 74,400 86,400 90,400 110,400 361,600 18,600 21,600 22,600 27,600 98,400 $ 55,800 $ 64,800 $ 67,800 $ 82,800 $ 271,200 Historically, cost of goods sold is about 60 percent of sales revenue. Selling and administrative expenses are about 10 percent of sa revenue. Fred Arvada, the chief executive offic

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Jacob Long, the controller of Arvada Corporation, is trying to prepare a sales budget for the coming year. The income statements for the last four quarters follow: Sales revenue Cost of goods sold Gross profit Selling & administrative expenses Net income First Quarter Second Quarter Third Quarter Fourth Quarter Total $ 186,000 $ 216,000 $226,000 $ 276,000 111,600 74,400 18,600 129,600 86,400 21,600 135,600 90,400 22,600 165,600 110,400 27,600 $ 904,000 542,400 361,600 90,400 $ 55,800 $ 64,800 $ 67,800 $ 82,800 $ 271,200 Historically, cost of goods sold is about 60 percent of sales revenue. Selling and administrative expenses are about 10 percent of sales revenue. Fred Arvada, the chief executive officer, told Mr. Long that he expected sales next year to be 15 percent for each respective quarter above last year's level. However, Rita Banks, the vice president of sales, told Mr. Long that she believed sales growth would be only 10 percent. Required a. Prepare a pro forma income statement including quarterly budgets for the coming year using Mr. Arvada's estimate. b. Prepare a pro forma income statement including quarterly budgets for the coming year using Ms. Banks' estimate. Complete this question by entering your answers in the tabs below. Required A Required B Prepare a pro forma income statement including quarterly budgets for the coming year using Mr. Arvada's estimate. First Quarter Second Quarter Third Quarter Fourth Quarter Total Sales revenue $ 0 0 Cost of goods sold 0 0 0 0 0 Gross profit 0 Selling & administrative expenses $ 0 $ 0 $ 0 $ 0 $ 0 Net income
Transcribed Image Text:Jacob Long, the controller of Arvada Corporation, is trying to prepare a sales budget for the coming year. The income statements for the last four quarters follow: Sales revenue Cost of goods sold Gross profit Selling & administrative expenses Net income First Quarter Second Quarter Third Quarter Fourth Quarter Total $ 186,000 $ 216,000 $226,000 $ 276,000 111,600 74,400 18,600 129,600 86,400 21,600 135,600 90,400 22,600 165,600 110,400 27,600 $ 904,000 542,400 361,600 90,400 $ 55,800 $ 64,800 $ 67,800 $ 82,800 $ 271,200 Historically, cost of goods sold is about 60 percent of sales revenue. Selling and administrative expenses are about 10 percent of sales revenue. Fred Arvada, the chief executive officer, told Mr. Long that he expected sales next year to be 15 percent for each respective quarter above last year's level. However, Rita Banks, the vice president of sales, told Mr. Long that she believed sales growth would be only 10 percent. Required a. Prepare a pro forma income statement including quarterly budgets for the coming year using Mr. Arvada's estimate. b. Prepare a pro forma income statement including quarterly budgets for the coming year using Ms. Banks' estimate. Complete this question by entering your answers in the tabs below. Required A Required B Prepare a pro forma income statement including quarterly budgets for the coming year using Mr. Arvada's estimate. First Quarter Second Quarter Third Quarter Fourth Quarter Total Sales revenue $ 0 0 Cost of goods sold 0 0 0 0 0 Gross profit 0 Selling & administrative expenses $ 0 $ 0 $ 0 $ 0 $ 0 Net income
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