(Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Provincial Imports, Inc. Income Statement for the Year Ended December 31, 2019 Sales revenue $5,006,000 Less: Cost of goods sold 2,754,000 Gross profits $2,252,000 Less: Operating expenses 846,000 Operating profits $1,406,000 Less: Interest expense 191,000 Net profits before taxes $1,215,000 Less: Taxes (rate = 40%) 486,000 Net profits after taxes $729,000 Less: Cash dividends 291,600 To retained earnings $437,400 (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Provincial Imports, Inc. Balance Sheet December 31, 2019 Assets Liabilities and Stockholders' Equity Cash $201,000 Accounts payable $693,000 Marketable securities 234,000 Taxes payable 95,000 Accounts receivable 623,000 Notes payable 202,000 Inventories 499,000 Other current liabilities 5,400 Total current assets $1,557,000 Total current liabilities $995,400 Net fixed assets 1,394,000 Long-term debt 515,600 Common stock 73,000 Retained earnings 1,367,000 Total assets $2,951,000 Total liabilities and equity $2,951,000 (1) Projected sales are $6,010,000 (2) Cost of goods sold in 2019 includes $1,004,000 in fixed costs. (3) Operating expense in 2019 includes $251,000 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 $361,000 will be purchased during the year. Total depreciation expense for the year will be $102,000. (10) The tax rate will remain at 40%. a. Prepare a pro forma income statement for the year ended December 31, 2020, 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, 2020, using the information given and the judgmental approach. Include a reconciliation of the retained earnings account a. Prepare a pro forma income statement for the year ended December 31, 2020, 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, 2020 below: (Round to the nearest dollar.) Pro Forma Income Statement Provincial Imports, Inc. for the Year Ended December 31, 2020 (percent-of-sales method) 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 $ (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Provincial Imports, Inc. Income Statement for the Year Ended December 31, 2019 Sales revenue $5,006,000 Less: Cost of goods sold 2,754,000 Gross profits $2,252,000 Less: Operating expenses 846,000 Operating profits $1,406,000 Less: Interest expense 191,000 Net profits before taxes $1,215,000 Less: Taxes (rate = 40%) 486,000 Net profits after taxes $729,000 Less: Cash dividends 291,600 To retained earnings $437,400 (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Provincial Imports, Inc. Balance Sheet December 31, 2019 Assets Liabilities and Stockholders' Equity Cash $201,000 Accounts payable $693,000 Marketable securities 234,000 Taxes payable 95,000 Accounts receivable 623,000 Notes payable 202,000 Inventories 499,000 Other current liabilities 5,400 Total current assets $1,557,000 Total current liabilities $995,400 Net fixed assets 1,394,000 Long-term debt 515,600 Common stock 73,000 Retained earnings 1,367,000 Total assets $2,951,000 Total liabilities and equity $2,951,000 (1) Projected sales are $6,010,000 (2) Cost of goods sold in 2019 includes $1,004,000 in fixed costs. (3) Operating expense in 2019 includes $251,000 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 $361,000 will be purchased during the year. Total depreciation expense for the year will be $102,000. (10) The tax rate will remain at 40%. a. Prepare a pro forma income statement for the year ended December 31, 2020, 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, 2020, using the information given and the judgmental approach. Include a reconciliation of the retained earnings account a. Prepare a pro forma income statement for the year ended December 31, 2020, 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, 2020 below: (Round to the nearest dollar.) Pro Forma Income Statement Provincial Imports, Inc. for the Year Ended December 31, 2020 (percent-of-sales method) 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 $