Inktel is a technology company located in Silicon Valley. Its 2019 income statement is provided below. Given abnormal sales in 2019, Inktel expects 2020 sales to decline to $2.85 million. In addition, it knows that 1) interest expense will increase to $300,000, 2) depreciation expense will remain the same as in 2019, and 3) the firm will maintain its 2019 dividend payout ratio.

Inktel - Income statement for the year ended December 31, 2019
Sales revenue	$ 3,100,000
Less costs of goods sold	$ 1,900,000
Gross profits	$ 1,200,000
Less operating expenses
Selling, general and administrative expense	$ 240,000
Depreciation expense	$ 50,000
Earnings Before Interest and Taxes (operating profit)	$ 910,000
Less interest expense	$ 260,000
Taxable income	$ 650,000
Less taxes (34%)	$ 221,000
Net income	$ 429,000
Dividends	$ 232,500
Retained Earnings	$ 196,500

1. 1. Use the percentage of sales method to develop a proforma income statement for Inktel for 2020.
2. 2. Given what you know about percentage of sales, would you expect the 2020 income statement to over or under-estimate the companys actual net income for the year? Explain.