22 Integrative: Pro forma statements. Provincial Imports Inc. has assembled past (2021) financial statements (income statement Provincial Imports Inc. Income Statement for the Year Ended December 31, 2021 Sales Revenue $5,000,000 Less: Cost of goods sold Gross profits 2,750,000$2,250,000 Less: Operating expenses Operating profits Less: Interest expense Net profits before taxes Less: Taxes ( rate =21%) Net profits after taxes Less: Cash dividends To retained earnings Provincial Imports Inc. Balance Sheet December 31, 2021 \begin{tabular}{lrr} Assets & & Liab \\ \hline Cash & $200,000 & Accoun \\ Marketable securities & 225,000 & Taxes \\ Accounts receivable & 625,000 & Note \\ Inventories & 500,000 & Other \\ Total current assets & $1,550,000 & 1,400,000 \\ Net fixed assets & $2,950,000 \\ Total assets & & \\ & & \\ & & \end{tabular} (1) Projected sales are $6,000,000. 2) Cost of goods sold in 2021 includes $1,000,000 in fixed costs. 3) Operating expense in 2021 includes $250,000 in fixed costs. 4) Interest expense will remain unchanged. (5) The firm will pay cash dividends amounting to 40% of net profits after taxes. 6) Cash and inventories will double. 7) Marketable securities, notes payable, long-term debt, and common stock will remain unchanged. 8) Accounts receivable, accounts payable, and other current liabilities will change in direct response to the change in sales. (9) A new computer system costing $356,000 will be purchased during the year. Total depreciation expense for the year will be $110,000. 10) The tax rate will remain at 21%. a. Prepare a pro forma income statement for the year ended December 31,2022, using the fixed cost data given to improve the b. Prepare a pro forma balance sheet as of December 31, 2022, using the information given and the judgmental approach. c. Analyze these statements, and discuss the resulting external financing required. nswer - fill in the blue boxes below. a. Prepare a pro forma income statement for the year ended December 31,2022, using the fixed cost data given to improve the accuracy of the percent-of-sales method. Provincial Imports Inc. Pro Forma Income Statement for the Year Ended December 31, 2022 Less: Cost of goods sold Gross profits Less: Operating expenses Operating profits Less: Interest expense Net profits before taxes Less: Taxes ( rate =40%) Net profits after taxes Less: Cash dividends To retained earnings b. Prepare a pro forma balance sheet as of December 31, 2022, using the information given and the judgmental approach. Include a reconciliation of the retained earnings account. Provincial Imports Inc. Pro Forma Balance Sheet as of December 31, 2022