K Pro forma income statement The marketing department of Metroline Manufacturing estimates that its sales in 2020 will be $1.65 million. Interest expense is expected to remain unchanged at $37,000, and the firm plans to pay $68,000 in cash dividends during 2020. Metroline Manufacturing's income statement for the year ended December 31, 2019, is given along with a breakdown of the firm's cost of goods sold and operating expenses into their fixed and variable components. a. Use the percent-of-sales method to prepare a pro forma income statement for the year ended December 31, 2020. b. Use fixed and variable cost data to develop a pro forma income statement for the year ended December 31, 2020. c. Compare and contrast the statements developed in parts a. and b. Which statement probably provides the better estimate of 2020 income? Explain why. Complete the pro forma income statement for the year ended December 31, 2020 below: (Round the percentage of sales to four decimal places and the pro forma income statement amounts to the nearest dollar.) Pro Forma Income Statement Metroline Manufacturing, Inc. for the Year Ended December 31, 2020 (percent-of-sales method) Sales $ Less: Cost of goods sold Gross profits $ Less: Operating expenses View an avamnin Got mom holn % % c. Compare and contrast the statements developed in parts a. and b. Which statement probably provides the estimate of 2020 income? Explain why. % $ % 6 60 Less: Cost of goods sold Gross profits Less: Operating expenses Operating profits Less: Interest expense Net profits before taxes Less: Taxes Net profits after taxes Less: Cash dividends To retained earnings a spreadsheet.) Metroline Manufacturing Income Statement for the Year Ended December 31, 2019 Sales revenue 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. To retained earnings $1,393,000 Metroline Manufacturing Breakdown of Costs and Expenses into Fixed and Variable Components for the Year Ended December 31, 2019 906,000 Cost of goods sold $487,000 Fixed cost 128,000 Variable cost $359,000 Total cost 37,000 Operating expenses $322,000 Fixed expenses 128,800 Variable expenses $193,200 Total expenses 68,000 $125,200 $220,000 686,000 $906,000 $37,000 91,000 $128,000