Pendleton Company, a merchandising company, is developing its master budget for 2015. The income statement for 2014 is as follows:

Gross Sales: $750,000

Less estimated uncollectible accounts: (7,500)

Net sales: 742,500

Cost of Goods sold:(430,000)

Gross Profit: 312,500

Operating expenses (including $25,000 depreciation): (200,500)

Net income: $112,000

The following are management's goals and forecasts for 2015:

1. Selling prices will increase by 6%, and sales volume will increase by 4%
2. The cost of merchandise will increase by 3%
3. All operating expenses are fixed and are paid in the month incurred. Price increases for operating expenses will be 10%. The company uses straight-line depreciation.
4. The estimated uncollectibles are 2% of budgeted sales.

Prepare a budgeted functional income statement for 2015