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United Mobile Corporation appeared to be experiencing a good year. First quarter sales were one-third ahead of last year and the sales department predicted that this rate would continue throughout the year. The controller asked Megan Casey, a summer accounting intern, to draft a forecast for the year and analyze the differences from last years results. She based the forecast on first quarter results plus the expected production costs for the remainder of the year. She worked with production, sales, and other department heads to get the necessary information. The results of these efforts follow:

UNITED MOBILE CORPORATION Expected Account Balances for December 31, Year 2
Cash	$5,280
Accounts Receivable	352,000
Inventory (January 1, year two)	211,200
Plant and Equipment	572,000
Accumulated Depreciation		$180,400
Accounts Payable		198,000
Notes Payable (due within one year)		220,000
Accrued Payables		102,300
Common Stock		308,000
Retained Earnings		476,080
Sales Revenue		2,640,000
Other Income		39,600
Manufacturing Costs
Materials	937,200
Direct Labor	959,200
Variable Overhead	572,000
Depreciation	22,000
Other Fixed Overhead	34,100
Marketing
Commissions	88,000
Salaries	70,400
Promotion and Advertising	198,000
Administrative
Salaries	70,400
Travel	11,000
Office Costs	39,600
Income Taxes
Dividends	22,000
	$4,164,380	$4,164,380

Adjustments for the change in inventory and for income taxes have not been made. The scheduled production for this year is 495,000 units and planned sales volume is 440,000 units. Sales and production volume was 330,000 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:

UNITED MOBILE CORPORATION Statement of Income and Retained Earnings For the Budget Year Ended December 31, Year 1
Revenues
Sales Revenue		$1,980,000
Other Income		66,000	$1,860,000
Expenses
Cost of Goods Sold
Materials	$ 580,800
Direct Labor	594,000
Variable Overhead	356,400
Fixed Overhead	52,800
	$1,584,000
Beginning Inventory	211,200
	$1,795,200
Ending Inventory	211,200	$1,584,000
Selling
Salaries	$ 59,400
Commissions	66,000
Promotion and Advertising	138,600	264,000
General and Administrative
Salaries	$ 61,600
Travel	8,800
Office Costs	35,200	105,600
Income Taxes		36,960	1,990,560
Operating Profit			55,440
Beginning Retained Earnings			442,640
Subtotal			$ 498,080
Less Dividends			22,000
Ending Retained Earnings			$ 476,080

Complete the following:

Prepared a budgeted income statement and balance sheet.

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