Prepare a pro forma income statement

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Question - Jacob Long, the controller of Arvada Corporation, is trying to a sales budget for the coming year. The income statements for the last four quarters follow:

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 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 -  

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.

Reference no: EM132899663

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