1.Moes Tavern has predicted an increase in sales equal to 11 % for 2021. Depreciation will remain the same in 2021 ($80,000), but interest expense is expected to increase to $37,000. Other costs will increase proportionately with sales. Refer to the 2020 income statement below and prepare a proforma income statement for 2021 for Moes Tavern.

Moe's Tavern Income Statement 2020
Sales	$1,800,000
Costs of goods sold	$1,100,000
Selling, general & admin. expense	$320,000
Depreciation	$80,000
Earnings before interest and taxes	$300,000
Interest expense	$35,000
Taxable income	$265,000
Taxes (34%)	$90,100
Net Income	$174,900

2.Moes Tavern expects to pay out dividends equal to $65,000 in 2021. Calculate Moes Taverns dividend payout ratio for 2021

3.Use your proforma income statement for Moes Tavern to calculate retained earnings for 2021

4.Refer to Moes Taverns simplified balance sheet below. As noted in question 1, Moes Tavern is expecting an increase in sales equal to your special rate. It also assumes that assets will increase by 11%. However, it does NOT expect debt and equity to vary proportionately with sales. Prepare a simplified proforma balance sheet for 2021 for Moes Tavern based on the expected change in assets and the retained earnings you calculated in question 3.

Moe's Tavern Simplified Balance Sheet 2020
Assets	$1,400,000		Debt	$600,000
			Equity	$800,000
Total	$1,400,000		Total	$1,400,000

5. Use your simplified proforma balance sheet from question 4 to Identify and calculate your plug-in variable for Moes Tavern.