Azusa Company reported the following financial results for 2016 and 2017:

Azusa Company did not pay any dividends in 2016 or in 2017.
Required
Prepare pro forma income statements and balance sheets for Azusa Company for the years 2018—2020 using the following assumptions:
1. Sales are expected to grow annually by four percent.
2. Cost of sales will remain at a constant forty percent of sales.
3. Sales, general, and administrative (SG&A) expenses will remain at a constant ten percent of sales.
4 . The company will not be purchasing any additional property, plant, and equipment for the next three years (i.e., net PP&E will only change by the annual depreciation expense).
5. Since there will not be any additional purchases of PP&E, nor any sales, depreciation expense will remain constant for the next three years.
6. The company does not foresee any need for additional debt or equity financing during the next three years. Long-term debt is interest only with the entire principal balance due in five years.
he Interest expense is computed as five percent of the long-term debt balance.
8. Income taxes are computed at an effective tax rate of 30 percent.
9. There are no plans to pay dividends during the next three years.
10. Cash, other current assets, and accounts payable will remain constant during the next three years, at their:2017 level.
11. Other current liabilities are used as a plug figure to balance the balance sheet.

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Sales.. Cost of goods sold. Gross profit.. SG&A expense. Depreciation... Interest Income before taxes. Income taxes Net income. AZUSA COMPANY Income Statements 2016 2017 $3,000 $3,120 1,200 1,248 1,800 1,872 300 312 1,200 1,200 250 150 50 210 15 63 $ 35 $ 147