Name: Instructions: Show all your work to get partial credit. Answers without any work-even correct-will not receive any credit. Good Luck! Provincial Imports, Inc., has assembled last year's income statement and financial projections for use in preparing financial plans for the coming year. Information related to financial projections for next year is as follows: (1) Projected sales are $6,005,000. (2) Cost of goods sold last year includes $1,005,000 in fixed costs. (3) Operating expense last year includes $240,000 in fixed costs. (4) Interest expense will remain unchanged. (5) The firm will pay cash dividends amounting to 35% of net profits after taxes. (6) Cash and inventories will double. (7) Marketable securities, notes payable, long-term debt, and common stock will remain unchanged. (8) Accounts receivable, accounts payable, and other current liabilities will change in direct response to the change in sales. (9) A new computer system costing $356,000 will be purchased during the year. Total depreciation expense for the year will be $111,000. (10) The tax rate will remain at 40%. a. Prepare a pro forma income statement for next year, using the percent-of-sales method. b. Prepare a pro forma income statement for next year, using the fixed cost data given to improve the accuracy of the percent-of-sales method. 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 $4,994,000 2752000 $2,242,000 851000 $1,391,000 191000 $1,200,000 480000 $720,000 252000 $468,000