Jacob Long, the controller of Arvada Corporation, is trying to prepare a sales budget for the...
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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 Cost of goods sold Gross profit First Quarter $176,000 Second Quarter $206,000 105,600 Selling & administrative expenses Net income 70,400 17,600 20,600 $ 52,800 $ 61,800 123,600 129,600 $266,000 159,600 11111 82,400 86,400 21,600 106,400 26,600 Third Quarter $216,000 Fourth Quarter Total $864,000 518,400 345,600 86,400 $ 64,800 $ 79,800 $259,200 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. 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 Cost of goods sold Gross profit First Quarter $176,000 Second Quarter $206,000 105,600 Selling & administrative expenses Net income 70,400 17,600 20,600 $ 52,800 $ 61,800 123,600 129,600 $266,000 159,600 11111 82,400 86,400 21,600 106,400 26,600 Third Quarter $216,000 Fourth Quarter Total $864,000 518,400 345,600 86,400 $ 64,800 $ 79,800 $259,200 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.
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a Pro Forma Income Statement using Mr Arvadas estimate 15 sales growth Quarter 1 Sales Revenue 10560... View the full answer
Related Book For
Fundamental Managerial Accounting Concepts
ISBN: 978-1259569197
8th edition
Authors: Thomas Edmonds, Christopher Edmonds, Bor Yi Tsay, Philip Olds
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