Pro forma income statement The marketing department of Metroline Manufacturing estimates that its sales in 2020 will be $ 1.64 million. Interest expense is expected to remain unchanged at $ 38 comma 000 , and the firm plans to pay $ 74 comma 000 in cash dividends during 2020. Metroline Manufacturing's income statement for the year ended December 31, 2019 , is given LOADING... , 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.

etroline Manufacturing Income Statement for the Year Ended December 31, 20192019
Sales revenue	$1,396,000
Less: Cost of goods sold	917,000
Gross profits	$479,000
Less: Operating expenses	110,000
Operating profits	$369,000
Less: Interest expense	38,000
Net profits before taxes	$331,000
Less: Taxes (rate equals 40 %rate=40% )	132,400
Net profits after taxes	$198,600
Less: Cash dividends	65,000
To retained earnings	$133,600

Metroline Manufacturing Breakdown of Costs and Expenses into Fixed and Variable Components for the Year Ended December 31, 20192019
Cost of goods sold
Fixed cost	$216,000
Variable cost	701,000
Total cost	$917,000
Operating expenses
Fixed expenses	$35,000
Variable expenses	75,000
Total expenses	$110,000