Kiwi Designs, Ltd., expects sales during 2018 to rise 20 percent from the 2017 level of $3.5 million. Because of a scheduled large loan payment, the interest expense in 2017 is expected to drop to $325,000. The firm plans to increase its cash dividend payments during 2018 to $320,000. The companys year-end 2017 income statement follows:

Use the percent-of-sales method to prepare a 2018 pro forma income statement.

Kiwi Design, Ltd Income Statement For Year ended December 31, 2017 $3,500,000 Sales Revenue 1,925,000 Cost of Goods Sold $1,575,000 Gross Profit Operating Expenses 420,000 $1,155,000 Operating Profits Interest Expenses 400,000 $755,000 $226,500 $528,500 Net Profits before Tax Tax (rate 30%) Profits after taxes Dividends 250,000 To retained Earnings $278,500