ma ule S es and expense to period in which they are incurred, not necessarily when cash is received or paid. Investors and analysts use the information presented in the income statement, and the other financial statements and reports, to evaluate the company's financial performance and condition, Consider the following scenario: Blue Hamster Manufacturing Inc.'s income statement reports data for its first year of operation. The firm's CEO would like sales to increase by 25% next year. 1. Blue Hamster is able to achieve this level of increased sales, but its interest costs increase from 10% to 15% of earnings before Interest and taxes (EBIT). 2. The company's operating costs (excluding depreciation and amortization) remain at 65.00% of net sales, and its depreciation and amortization expenses remain constant from year to year 3. The company's tax rate remains constant at 40% of its pre-tax income or earnings before taxes (ET) 4. In Year 2, Blue Hamster expects to pay $100,000 and $1,419,075 of preferred and common stock dividends, respectively Complete the Year 2 income statement data for Blue Hamster, then answer the questions that follow. Round each dollar value to the nearest whole dollar. Blue Hamster Manufacturing Inc. Complete the Year 2 Income statement data for Blue Hamster, then answer the questions that follow. Round each dollar value to the nearest whole dollar. Blue Hamster Manufacturing Inc. Income Statement Years Ending December 31 Year (Forecasted) Year 1 $ $20,000,000 (13,000,000) (800,000) (800,000) $ $6,200,000 (620,000) Net sales Fixed operating costs, except depreciation and amortization Depreciation and amortization expenses Net operating income (or EBIT) Interest Earnings before taxes (or EBT) Taxes (40%) Net Income Preferred dividends Earnings available to common stockholders (EAC) Common dividends $ $5,580,000 (2,232,000) $3,348,000 (100,000) $3,248,000 (1,171,800) $2,076,200 Addition to retained earnings $2,535,425