Pro forma income statement The marketing department of Metroline Manufacturing estimates that its sales in 2016 will be $1.50 million. Interest expense is expected to remain unchanged at $35,000, and the firm plans to pay $70,000 in cash dividends during 2016. Metroline Manufacturing's income statement for the year ended December 31, 2015, is given 2, 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, 2016. b. Use fixed and variable cost data to develop a pro forma income statement for the year ended December 31, 2016. c. Compare and contrast the statements developed in parts a. and b. Which statement probably provides the better estimate of 2016 income? Explain why. a. Use the percent-of-sales method to prepare a pro forma income statement for the year ended December 31, 2016. Complete the pro forma income statement for the year ended December 31, 2016 below: (Round the percentage of sales to four decimal places and the pro forma income statement amounts to the nearest dollar.) i Data Table Pro Forma Income Statement Metroline Manufacturing, Inc. for the Year Ended December 31, 2016 (percent-of-sales method) (Click on the icon located on the top-right corner of the data tables below in order to copy its contents into a spreadsheet.) 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 Metroline Manufacturing Income Statement for the Year Ended December 31, 2015 Sales revenue $1,400,000 Less: Cost of goods sold 910,000 Gross profits $490,000 Less: Operating expenses 120,000 Operating profits $370,000 Less: Interest expense 35,000 Net profits before taxes $335,000 Less: Taxes (rate = 40%) 134,000 Net profits after taxes 5201,000 Less: Cash dividends 66,000 To retained earnings $135,000 Metroline Manufacturing Breakdown of Costs and Expenses into Fixed and Variable Components for the Year Ended December 31, 2015 Cost of goods sold Fixed cost $210,000 Variable cost 700,000 Total cost $910,000 Operating expenses Fixed expenses $36,000 Variable expenses 84,000 Total expenses $120,000 To retained earnings Print Done