9. Integrative Pro forma statements Provincial Imports, Inc., has assembled past (2015) financial statements (income statement and balance sheet1) and financial projections for use in preparing financial plans for the coming year (2016) Information related to financial projections for the year 2016 is as follows (1) Projected sales are $5,992,000 (2) Cost of goods sold in 2015 includes $990,000 in fixed costs (3) Operating expense in 2015 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 $348,000 will be purchased during the year. Total depreciation expense for the year will be $105,000 (10) The tax rate will remain at 40% a. Prepare a pro forma income statement for the year ended December 31, 2016, using the fixed cost data given to improve the accuracy of the percent-of-sales method b. Prepare a pro forma balance sheet as of December 31, 2016, using the information given and the judgmental approach. Include a reconciliation of the retained earnings account. c. Analyze these statements, and discuss the resulting external financing required a. Prepare a pro forma income statement for the year ended December 31, 2016, using the fixed cost data given to improve the accuracy of the percent-of-sales method Complete the pro forma income statement for the year ended December 31, 2016 below: (Round to the nearest dollar.) Pro Forma Income Statement Provincial Imports, Inc. for the Year Ended December 31, 2016 (percent-of-sales method) $5,992,000 Sales 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 (40%) To Retained earnings b. Prepare a pro forma balance sheet as of December 31, 2016, using the information given and the judgmental approach. Include a reconciliation of the retained earnings account. NOTE: Taxes payable for 2015 are about 19.7752% of the 2015 taxes on the income statement. The pro forma value is obtained by taking 19.7752% of the 2016 taxes Complete the assets part of the pro forma balance sheet as of December 31, 2016: (Round to the nearest dollar.)