MG 491 - Senior Capstone Pro Forma Income Statements - Blue Specialty Corporation Homework Assignment - Part 1 of 2 Dr. Drea Blue Specialty Corporation, Ohio Division For the Year ended December 31, 2019 Revenues and Gains Sales revenues $300,000 Interest revenues (T-Bill) $20,000 Gain on sales of assets $18,500 Total revenue and gains $338,500 Blue Specialty Corp. sells specialty advertising items The company operates in select markets within the US and is considering expansion into Missouri and lowa, Blue Specialty's product mix is purchased from manufacturers in China and imported for sale through Blue. Blue Specialty has estimated that sales for the two potential markets would be proportional to their population. Blue Specialty products are primarily sold through a combination of its web site, calling selected customers by phone, and e-mail. Salaries are paid through another division of Blue Specialty. Expenses and losses Cost of goods sold Commissions expense Office supplies expense Office equipment expense Advertising expense Utilities expense Total expenses and losses Net income before taxes Income tax Net income after tax $180,000 $24,000 $5,000 $2.500 $6,000 $4,000 $221,500 $117,000 $17,550 $99,450 To the left is the 2019 income statement for Blue's Ohio Division. The populations for Ohio and the other two markets under consideration are: Ohio: 11,590,000 Missouri: 6,064,000 lowa: 3,017,000 Your task is to create separate pro forma income statements on each of these two potential markets. Keep in mind that some expenses (CG5, commissions) are likely to be proportional to sales, some expenses are fixed (advertising, office expenses, utilities), and some are one-time items (sale of assets), and some revenues can be fixed (interest revenue on a treasury bill, etc.) Calculate the appropriate pro forma income statements for 2020, then make a recommendation on what actions should be pursued