Panther Corporation appeared to be experiencing a good year. Sales in the first quarter were one-third ahead of last year, and the sales department predicted that this rate would continue throughout the entire year. The controller asked Janet Nomura, a summer accounting intern, to prepare a draft forecast for the year and to analyze the differences from last year's results. She based the forecast on actual results obtained in the first quarter plus the expected costs of production to be completed in the remainder of the year. She worked with various department heads (production, sales, and so on) to get the necessary information. The results of these efforts follow: PANTHER CORPORATION Expected Account Balances for December 31, Year 2 Cash $ 6,500 Accounts receivable 337,000 240,000 Inventory (January 1, Year 2) Plant and equipment 605,000 Accumulated depreciation Accounts payable Notes payable (due within one year) Accrued payables Common stock Betained garn Retained earnings Salon rem Sales revenue Other income Other income Manufacturing costs Materials Materials 850,000 Direct labor 900,000 545,000 Variable overhead Deprec Depreciation 37,000 Other fixed overhead 48,000 Marketing arketin Commissions 140,000 Salaries 81,000 Promotion and advertising cond 284,000 Administrative www Salaries 81,000 Travel 18,500 53,000 Office costs Income taxes Dividends 37,000 $4,263,000 $4,263,000 Adjustments for the change in inventory and for income taxes have not been made. The scheduled production for this year is 350,000 units, and planned sales volume is 300,000 units. Sales and production volume was 200,000 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: PANTHER CORPORATION Statement of Income and Retained Earnings For the Budget Year Ended December 31, Year 1 Revenues Sales revenue $1,700,000 Other income 55,000 $1,755,000 Expenses Cost of goods sold Materials $ 420,000 Direct labor 500,000 Variable overhead 215,000 Fixed overhead 65,000 $1,200,000 Beginning inventory 240,000 $1,440,000 Ending inventory 240,000 $1,200,000 Selling Salaries $ 71,000 Commissions 77,000 Promotion and advertising 143,000 291,000 General and administrative Salaries 73,000 Travel 17,000 Office costs 49,000 139,000 Income taxes 50,000 Operating profit Beginning retained earnings Subtotal Less dividends Ending retained earnings Required: Prepared a budgeted income statement and balance sheet. $ $ 181,000 197,000 217,000 110,000 450,000 468,000 2,570,000 70,000 1,680,000 75,000 430,000 $ 505,000 37,000 $ 468,000