Ace Manufacturing, Inc., is preparing pro forma financial statements for 2011. The firm utilizied the percent-of-sales method to estimate costs for the next year. Sales in 2010 were $2 million and are expected to increase to $2.4 million in 2011. The firm has a 40 percent tax rate. Given the 2010 income statement, estimate net profit and retained earnings for 2011. Income Statement Ace Manufacturing, Inc. For the Year Ended December 31, 2010 Sales $2,000,000 Less: Cost of Goods Sold $1,200,000 Gross Profit $800,000 Less: Selling Expense $200.000 General & administrative expense $60,000 Less: Depreciation $40,000 Operating profit $500,000 Less: Interest $80,000 Earnings before taxes $420,000 Less: Taxes (40%) $168,000 Net Profit after taxes / EACS $252,000 Common stock dividends $100,000