Exercise 14-15 Preparing pro forma income statements with different assumptions LO 14-6 Daniel Singh, the controller of Meier Corporation, is trying to prepare a sales budget for the coming year. The income statements for the last four quarters follow. First Second Third Fourth Quarter Quarter Quarter Quarter Total Sales revenue $ 179,000 $ 209,000 $ 219,000 $ 269,000 $ 876,000 Cost of goods sold 89,500 104,500 109,500 134,500 438,000 Gross profit 89,500 104,500 109,500 134,500 438,000 Selling & admin. expenses 17,900 20,900 21,900 26,900 87,600 Net income $ 71,600 $ 83,600 $ 87,600 $ 107,600 $ 350,400 Historically, cost of goods sold is about 50 percent of sales revenue. Selling and administrative expenses are about 10 percent of sales revenue. Joe Meier, the chief executive officer, told Mr. Singh that he expected sales next year to be 15 percent for each respective quarter above last years level. However, Ashley Odom, the vice president of sales, told Mr. Singh 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. Meiers estimate. (first, second, third, fourth quarter, and total sales revenue, cost of good sold, gross profit, selling & admin expenses, and net income)

b. Prepare a pro forma income statement including quarterly budgets for the coming year using Ms. Odoms estimate.(first, second, third, fourth quarter, and total sales revenue, cost of good sold, gross profit, selling & admin expenses, and net income )