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: First Quarter Second Quarter Third Quarter Sales revenue Cost of goods sold $ 187,000 (130,900) Gross profit Selling & administrative expenses Net income 56,100 (18,700) $ 37,400 $ 217,000 (151,900) 65,100 (21,700) $ 43,400 $ 227,000 (158,900) Fourth Quarter $ 277,000 68,100 (22,700) (193,900) 83,100 (27,700) Total $ 908,000 (635,600) 272,400 (90,800) $ 45,400 $ 55,400 $ 181,600 Historically, cost of goods sold is about 70 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 10 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 5 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. Sales revenue Cost of goods sold Second First Quarter Quarter Third Quarter Fourth Quarter Total
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: First Quarter Second Quarter Third Quarter Sales revenue Cost of goods sold $ 187,000 (130,900) Gross profit Selling & administrative expenses Net income 56,100 (18,700) $ 37,400 $ 217,000 (151,900) 65,100 (21,700) $ 43,400 $ 227,000 (158,900) Fourth Quarter $ 277,000 68,100 (22,700) (193,900) 83,100 (27,700) Total $ 908,000 (635,600) 272,400 (90,800) $ 45,400 $ 55,400 $ 181,600 Historically, cost of goods sold is about 70 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 10 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 5 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. Sales revenue Cost of goods sold Second First Quarter Quarter Third Quarter Fourth Quarter Total
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
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:
First Quarter Second Quarter Third Quarter
Sales revenue
Cost of goods sold
$ 187,000
(130,900)
Gross profit
Selling & administrative expenses
Net income
56,100
(18,700)
$ 37,400
$ 217,000
(151,900)
65,100
(21,700)
$ 43,400
$ 227,000
(158,900)
Fourth Quarter
$ 277,000
68,100
(22,700)
(193,900)
83,100
(27,700)
Total
$ 908,000
(635,600)
272,400
(90,800)
$ 45,400
$ 55,400
$ 181,600
Historically, cost of goods sold is about 70 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 10 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 5
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.
Sales revenue
Cost of goods sold
Second
First Quarter
Quarter
Third Quarter
Fourth
Quarter
Total
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