After much consideration, the company is seriously considering moving ahead with the expansion.Using the following projections and the template in Appendix A build a Pro-forma Income Statement for each quarter of the expansion.

J & J Sports Inc. has estimated the following additional results for the first two years of expansion.

Expected revenues for the first two years are as follows.

oSales for the 1^st quarter of Year 3 are projected at $650,000.

Year 1 ('000s)

Year 2 ('000s)

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

50.00

90.00

160.00

200.00

280.00

350.00

440.00

550.00

The Company quarterly purchases (COGS) from suppliers = 50% of the next quarter's forecasted sales.

General and administrative expenses (wages, taxes, office etc.) are estimated to be $10,000 in Year 1 - Q1 and 20% of sales thereafter.

Sales salaries and commissions are estimated to be 8% of sales.

The company tax rate is 35% and they currently have a quarterly interest expense of $2,500.