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	$	90,000			$	100,000			$	105,000			$	130,000			$	425,000
Cost of goods sold		54,000				60,000				63,000				78,000				255,000
Gross profit		36,000				40,000				42,000				52,000				170,000
Selling & administrative expenses		8,500				10,000				10,500				13,000				42,000
Net income	$	27,500			$	30,000			$	31,500			$	39,000			$	128,000

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 8 percent for each respective quarter above last years 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. Arvadas estimate.

Prepare a pro forma income statement including quarterly budgets for the coming year using Ms. Banks estimate.