Panther Corporation appeared to be experiencing a good year. Sales in the first quarter were one-third ahead of last year, and the sales department predicted that this rate would continue throughout the entire year. The controller asked Janet Nomura, a summer accounting intern, to prepare a draft forecast for the year and to analyze the differences from last year's results. She based the forecast on actual results obtained in the first quarter plus the expected costs of production to be completed in the remainder of the year. She worked with various department heads (production, sales, and so on) to get the necessary information. The results of these efforts follow:PANTHER CORPORATIONExpected Account Balances for December 31, Year 2Cash$4,800Accounts receivable320,000Inventory (January 1, Year 2)192,000Plant and equipment 520,000Accumulated depreciation 164,000Accounts payable 180,000Notes payable (due within one year) 200,000Accrued payables 93,000Common stock 280,000Retained earnings 432,800Sales revenue 2,400,000Other income 36,000Manufacturing costsMaterials 852,000Direct labor 872,000Variable overhead 520,000Depreciation 20,000Other fixed overhead 31,000MarketingCommissions 80,000Salaries 64,000Promotion and advertising 180,000AdministrativeSalaries 64,000Travel 10,000Office costs 36,000Income taxes —Dividends 30,000$4,342,800 $4,342,800Adjustments for the change in inventory and for income taxes have not been made. the scheduled production for this year is 450,000 units, and planned sales volume is 400,000 units. Sales and production volume was 300,000 units last year. the company uses a full-absorption costing and FIFO inventory system and is subject to a 40 percent income tax rate. The actual income statement for last year follows. PANTHER CORPORATIONStatement of Income and Retained EarningsFor the Budget Year Ended December 31, Year 1RevenuesSales revenue$1,800,000Other income 60,000 $1,860,000ExpensesCost of goods soldMaterials $528,000Direct labor 540,000Variable overhead 324,000Fixed overhead 48,000 $1,440,000Beginning inventory 192,000 $1,632,000Ending inventory 192,000 $1,440,000SellingSalaries $54,000Commissions 60,000Promotion and advertising 126,000 240,000General and administrativeSalaries $56,000Travel 8,000Office costs 32,000 96,000Income taxes 33,600 1,809,600Operating profit 64,500Beginning retained earnings 402,400Subtotal $452,800Less dividends 20,000Ending retained earnings $432,800Required:
1. Prepared a budgeted income statement and balance sheet.