Pro forma income statement The marketing department of Metroline Manufacturing estimates that its sales in 2020 will be $1.56 million. Interest expense is expected to remain unchanged at $34,000, and the firm plans to pay $69,000 in cash dividends during 2020. Metroline Manufacturing's income statement for the year ended December 31, 2019, is given , 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. a. Use the percent-of-sales method to prepare a pro forma income statement for the year ended December 31, 2020. Complete the pro forma income statement for the year ended December 31, 2020 below: (Round the percentage of sales to four decimal places and the pro forma income statement amounts to the nearest dollar.) Pro Forma Income Statement Metroline Manufacturing, Inc. for the Year Ended December 31, 2020 (percent-of-sales method) Sales $ % Less: Cost of goods sold Gross profits $ Less: Operating expenses % Operating profits $ Less: Interest expense Net profits before taxes $ Less: Taxes Net profits after taxes $ Less: Cash dividends To retained earnings $ Data table (For Income Staement, click on the icon here in order to copy the contents of the data table below into a spreadsheet.) (For Breakdown of Costs and Expenses, click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Metroline Manufacturing Income Statement for the Year Ended December 31, 2019 Sales revenue $1,392,000 Less: Cost of goods sold 917,000 Gross profits $475,000 Less: Operating expenses 127,000 Operating profits $348,000 Less: Interest expense 34,000 Net profits before taxes $314,000 Less: Taxes (rate = 40%) 125,600 Net profits after taxes $188,400 Less: Cash dividends 61,000 To retained earnings $127,400 Metroline Manufacturing Breakdown of Costs and Expenses into Fixed and Variable Components for the Year Ended December 31, 2019 Cost of goods sold Fixed cost $212,000 Variable cost 705,000 Total cost $917,000 Operating expenses Fixed expenses $35,000 Variable expenses 92,000 Total expenses $127,000