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: Sales revenue First Quarter $182,000 Second Third Quarter Quarter Fourth Quarter Total $212,000 $222,000 $272,000 $888,000 Cost of goods sold 91,000 106,000 111,000 136,000 444,000 Gross profit 91,000 106,000 111,000 136,000 444,000 Selling & administrative expenses Net income 18,200 21,200 22,200 27,2001 88,800 $ 72,800 $ 84,800 $88,800 $108,800 $355,200 Historically, cost of goods sold is about 50 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 10 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 5 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. 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 Fourth Quarter Total Required A Required Bl Prepare a pro forma income statement including quarterly budgets for the coming year using Ms. Banks' estimate. First Quarter Second Quarter Third Quarter Sales revenue Cost of goods sold Gross profit Selling & administrative expenses Net income < Required A Required B Fourth Quarter Total