Exercise 14-15A (Algo) Preparing pro forma income statements with different assumptions LO 14-6 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 Sales revenue $188,000 $218,000 Third Quarter $228,000 Fourth Quarter $278,000 Total $912,000 Cost of goods sold 112,800 130,800 136,800 166,800 547,200 Gross profit 75,200 87,200 91,200 111,200 364,800 Selling & administrative expenses Net income 18,800 21,800 22,800 27,800 91,200 $ 56,400 $ 65,400 $ 68,400 $ 83,400 $273,600 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 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 Gross profit Selling & administrative expenses Net income First Quarter Second Quarter Third Quarter Required A Required B > Fourth Quarter Total 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 Ms. Banks' estimate. Sales revenue Cost of goods sold Gross profit Selling & administrative expenses Net income First Quarter Second Quarter Third Quarter < Required A Required B Fourth Quarter Total