Jacob Long, the controller of Arvada Corporation, is trying to prepare a sales budget for the coming year. The income st...
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 | Third Quarter | Fourth Quarter | Total | |||||||||||||||
| Sales revenue | $ | 174,000 | $ | 204,000 | $ | 214,000 | $ | 264,000 | $ | 856,000 | |||||||||
| Cost of goods sold | 121,800 | 142,800 | 149,800 | 184,800 | 599,200 | ||||||||||||||
| Gross profit | 52,200 | 61,200 | 64,200 | 79,200 | 256,800 | ||||||||||||||
| Selling & administrative expenses | 17,400 | 20,400 | 21,400 | 26,400 | 85,600 | ||||||||||||||
| Net income | $ | 34,800 | $ | 40,800 | $ | 42,800 | $ | 52,800 | $ | 171,200 | |||||||||
Historically, cost of goods sold is about 70 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
-
Prepare a pro forma income statement including quarterly budgets for the coming year using Mr. Arvada’s estimate.
-
Prepare a pro forma income statement including quarterly budgets for the coming year using Ms. Banks’s estimate.
Complete this question by entering your answers in the tabs below.
Prepare a pro forma income statement including quarterly budgets for the coming year using Mr. Arvada’s estimate.
|
Prepare a pro forma income statement including quarterly budgets for the coming year using Ms. Banks’s estimate.
|
Homework Answers
| Part-1 | ||||||||||
| First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Total | ||||||
| Last year | Coming year | Last year | Coming year | Last year | Coming year | Last year | Coming year | Last year | Coming year | |
| Sales revenue | $174,000 | $200,100 | $204,000 | $234,600 | $214,000 | $246,100 | $264,000 | $303,600 | $856,000 | $984,400 |
| Cost of goods sold | $121,800 | $140,070 | $142,800 | $164,220 | $149,800 | $172,270 | $184,800 | $212,520 | $599,200 | $689,080 |
| Gross profit | $52,200 | $60,030 | $61,200 | $70,380 | $64,200 | $73,830 | $79,200 | $91,080 | $256,800 | $295,320 |
| Selling & administrative expenses | $17,400 | $20,010 | $20,400 | $23,460 | $21,400 | $24,610 | $26,400 | $30,360 | $85,600 | $98,440 |
| Net income | $34,800 | $40,020 | $40,800 | $46,920 | $42,800 | $49,220 | $52,800 | $60,720 | $171,200 | $196,880 |
| Working Note: Coming year : Sales= last year Sales X 1.15 |
| Cost of Goods Sold = Sales Revenue X 70% |
| Selling & Admin Expense = Sales Revenue X 10% |
| Part-2 | ||||||||||
| First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Total | ||||||
| Last year | Coming year | Last year | Coming year | Last year | Coming year | Last year | Coming year | Last year | Coming year | |
| Sales revenue | $174,000 | $191,400 | $204,000 | $224,400 | $214,000 | $235,400 | $264,000 | $290,400 | $856,000 | $941,600 |
| Cost of goods sold | $121,800 | $133,980 | $142,800 | $157,080 | $149,800 | $164,780 | $184,800 | $203,280 | $599,200 | $659,120 |
| Gross profit | $52,200 | $57,420 | $61,200 | $67,320 | $64,200 | $70,620 | $79,200 | $87,120 | $256,800 | $282,480 |
| Selling & administrative expenses | $17,400 | $19,140 | $20,400 | $22,440 | $21,400 | $23,540 | $26,400 | $29,040 | $85,600 | $94,160 |
| Net income | $34,800 | $38,280 | $40,800 | $44,880 | $42,800 | $47,080 | $52,800 | $58,080 | $171,200 | $188,320 |
| Working Note: Coming year : Sales= last year Sales X 1.10 |
| Cost of Goods Sold = Sales Revenue X 70% |
| Selling & Admin Expense = Sales Revenue X 10% |
Add Answer to:
Jacob Long, the controller of Arvada Corporation, is trying to prepare a sales budget for the coming year. The income st...
Jacob Long, the controller of Arvada Corporation, is trying to prepare a sales budget for the...
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 Selling & administrative expenses Net income First Quarter $172,000 86,000 86,000 17,200 $ 68,800 Second Quarter $202,000 101.000 101,000 20,200 $ 80,800 Third Quarter $212,000 106,000 106,000 21,200 $ 84,800 Fourth Quarter $262,000 131,000 131,000 26,200 $104,800 Total $848,000 424,000 424,000 84,800 $339,200 Historically, cost...
Jacob Long, the controller of Arvada Corporation, is trying to prepare a sales budget for the...
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 Second Third Fourth Quarter Quarter $229,000 114,500 114,500 22,900 Quarter $219,000 109,500 109,500 21,900 Quarter $279,000 139,500 139,500 27,900 Zotal Sales revenue $189,000 94,500 94,500 18,900 $ 75,600 $916,000 Cost of goods sold Gross profit Selling & administrative expenses 458,000 458,000 91,600 Net income $ 87,600 $366,400 $91,600 $111,600 Historically, cost of...
Jacob Long, the controller of Arvada Corporation, is trying to prepare a sales budget for the...
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 Selling & administrative expenses Net income First Quarter $182,000 91,000 91,000 18,200 $ 72,800 Second Quarter $212,069 106,eee 106,000 21,200 $ 84,800 Third Quarter $ 222,000 111,000 111, 22,200 $ 88,800 Fourth Quarter $ 272,000 136,000 136,00 27,200 $108,800 Total $380,000 444,000 444,000 88,888 $355,200...
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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: First Quarter Second Quarter Third Quarter Fourth Quarter Total Sales revenue $ 180,000 $ 210,000 $ 220,000 $ 270,000 $ 880,000 Cost of goods sold 90,000 105,000 110,000 135,000 440,000 Gross profit 90,000 105,000 110,000 135,000 440,000 Selling & administrative expenses 18,000 21,000 22,000 27,000 88,000 Net income $ 72,000 $ 84,000...
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4
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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 Selling & administrative expenses Net income First Quarter $172,000 86,000 86,000 17,200 $ 68,800 Second Quarter $202,000 101.000 101,000 20,200 $ 80,800 Third Quarter $212,000 106,000 106,000 21,200 $ 84,800 Fourth Quarter $262,000 131,000 131,000 26,200 $104,800 Total $848,000 424,000 424,000 84,800 $339,200 Historically, cost...
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 Second Third Fourth Quarter Quarter $229,000 114,500 114,500 22,900 Quarter $219,000 109,500 109,500 21,900 Quarter $279,000 139,500 139,500 27,900 Zotal Sales revenue $189,000 94,500 94,500 18,900 $ 75,600 $916,000 Cost of goods sold Gross profit Selling & administrative expenses 458,000 458,000 91,600 Net income $ 87,600 $366,400 $91,600 $111,600 Historically, cost of...
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 Selling & administrative expenses Net income First Quarter $182,000 91,000 91,000 18,200 $ 72,800 Second Quarter $212,069 106,eee 106,000 21,200 $ 84,800 Third Quarter $ 222,000 111,000 111, 22,200 $ 88,800 Fourth Quarter $ 272,000 136,000 136,00 27,200 $108,800 Total $380,000 444,000 444,000 88,888 $355,200...
4
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