1: XYZ Company is in the process of preparing pro forma Income statement for year ended 2021. The following is the income statement for year ended in 2020: XYZ Company Income Statement in JODS Sales Cost of goods sold Selling expenses Administrative expenses Depreciation EBIT Interest EBT Tax Rate (40%) Net income Common stock dividends 31/12/2020 1,000,000 (600,000) Schen (100,000) COD. (30,000) bue (20,000) 250,000 FBT (40,000) The 210,000 Tamb (84,000) Tuxe 126,000 2ht 50,000 menses XYZ Company utilized the percent-of-sales method to estimate costs a for 2021. Sales are expected to increase by 20% in 2021. The Chief Execu. Officer of the company has asked you as a Financial Manager to: 1. Prepare the 2021 pro forma income statement. (5 Marks) If JOD 100,000 of the cost of goods sold and JOD 20,000 of selling expenses in 2020 are to be considered fixed costs in 2021; and the interest expens and depreciation in 2020 are not expected to change in 2021, what will be t'e effect on 2021 net income and retained earnings, explain