Consider the financial statements for the Pretend Corporation for 2003:

Forecasted sales for the years 2004 through 2006 are as follows:

a. Using the percent-of-sales method, create a pro forma balance sheet for each of the years 2004 through 2006 for the Pretend Corporation.

b. Using the percent-of-sales method, create a pro forma income statement for each of the years 2004 through 2006 for the Pretend Corporation.

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Balance Sheet Income Statement Current assets $1,000 Sales $15,000 Plant and equipment 8,500 Cost of goods sold 10,000 Other assets 500 Gross profit $5,000 Total assets $10,000 Other operating expenses 500 Operating profit $4,500 Current liabilities $500 Interest expense 200 Long-term liabilities 5,000 Taxes 1,720 Stockholders' equity 4,500 Net profit $2,580 Total liabilities and equity $10,000 Dividends 1,032 Retained earnings $1,548