Reference no: EM132574444

Noventis Corporation prepared the following estimates for the four quarters of the current year:

                               First  Quarter               Second Quarter           Third Quarter             Fourth Quarter

Sales                   $1,450,000                       $1,740,000             $2,030,000                 $2,320,000

Cost of goods sold     445,000                           525,000                   595,000                   645,000

Administrative costs  340,000                            200,000                   205,000                      215,000

Advertising costs          0                                  160,000                    0                                 0

Executive bonuses          0                                     0                           0                                88,000

Provision for bad debts       0                                    0                         0                              70,000

Annual maintenance costs      78,000                         0                              0                           0

Additional Information

• First-quarter administrative costs include the $190,000 annual insurance premium.
• Advertising costs paid in the second quarter relate to television advertisements that will be broadcast throughout the entire year.
• No special items affect income during the year.
• Noventis estimates an effective income tax rate for the year of 40 percent.

Question 1: Assuming that actual results do not vary from the estimates provided, determine the amount of net income to be reported each quarter of the current year.

Question 2: Assume that actual results do not vary from the estimates provided except for that in the third quarter, the estimated annual effective income tax rate is revised downward to 38 percent. Determine the amount of net income to be reported each quarter of the current year.