Ch.6 Forecasting and Short-Term Financial Planning Income Statement Huddleston Manufacturing Company For the Year Ended December 31, 2005 Sales $2,800,000 Less: Cost of goods sold 1,820,000 Gross profits $ 980,000 Less: Operating expenses 240,000 Operating Profits $ 740,000 Less: Interest expense 70,000 Net profits before taxes $ 670,000 Less: Taxes (40%) 268,000 Net profits after taxes $ 402,000 Less: Cash Dividends 132,000 To: Retained earnings $ 270,000 Huddleston Manufacturing estimates its sales in 2006 will be $3 million. Interest expense is expected to remain unchanged at $70,000, and the firm plans to pay cash dividends of $140,000 during 2006. Use the percent-of-sales method to prepare a pro forma income statement for the year ended December 31, 2006, based on the 2005 income statement shown above