Bill Thomas, Bates & Hill’s controller, has received all the budgets prepared by the various operating units (see Exercises 5-8, 9, 11, 15, 17, 19, 20, 23, 25, and 29) and is ready to compile the pro-forma financial statements for the first quarter. The company’s balance sheet as of December 31 is as follows:
Cash................... $ 60,000
Accounts Receivable (net) ......... 58,500
Finished Goods Inventory ......... 49,000
Raw Materials Inventory ......... 7,560
Property, Plant & Equipment ....... 300,000
Accumulated Depreciation ........ (75,000)
Total Assets .............. $400,060
Accounts Payable ............. $ 18,000
Income Tax Payable ............ 75,260
Common Stock .............. 100,000
Retained Earnings ............ 206,800
Total Liabilities & Owners Equity..... $400,060

The company expects a 30% income tax rate, and all quarterly taxes are paid in the first month of the following quarter.

Required
a. Prepare Bates & Hill’s pro-forma income statement for the first quarter.
b. Prepare Bates & Hill’s pro-forma balance sheet as of March 31.