Jacob Long, the controller of Arvada Corporation, is trying to prepare a sales budget for the coming yedi. the last four quarters follow: Sales revenue Cost of goods sold. Gross profit Selling & administrative expenses. Net income First Quarter $176,000 105,600 Second Quarter $206,000 123,600 70,400 82,400 20,600 17,600 $ 52,800 $ 61,800 Third Quarter $216,000 129,600 86,400 21,600 $ 64,800 Fourth Quarter $266,000 159,600 106,400 26,600 $ 79,800 Total $864,000 518,400 345,600 86,400 $259,200 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 . Prepare a pro forma income statement including quarterly budgets for the coming year using Mr. Arvada's estimate. . Prepare a pro forma income statement including quarterly budgets for the coming year using Ms. Banks' estimate.

Jacob Long, the controller of Arvada Corporation, is trying to prepare a sales budget for the coming yedi. the last four quarters follow: Sales revenue Cost of goods sold. Gross profit Selling & administrative expenses. Net income First Quarter $176,000 105,600 Second Quarter $206,000 123,600 70,400 82,400 20,600 17,600 $ 52,800 $ 61,800 Third Quarter $216,000 129,600 86,400 21,600 $ 64,800 Fourth Quarter $266,000 159,600 106,400 26,600 $ 79,800 Total $864,000 518,400 345,600 86,400 $259,200 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 . Prepare a pro forma income statement including quarterly budgets for the coming year using Mr. Arvada's estimate. . Prepare a pro forma income statement including quarterly budgets for the coming year using Ms. Banks' estimate.

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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