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Pro forma income statement the marketing department of Metroline Manufacturing estimates that its sales next year will be $1.65 million. Interest expense is expected to
Pro forma income statement the marketing department of Metroline Manufacturing estimates that its sales next year will be $1.65 million. Interest expense is expected to remain unchanged at $39,000, and the firm plans to pay $65,000 in cash dividends. Metroline Manufacturing's income statement for the previous year 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 next year. b. Use fixed and variable cost data to develop a pro forma income statement for next year. C. Compare and contrast the statements developed in parts a. and b. Which statement probably provides the better estimate of 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 $ 1650000 1075425 Less: Cost of goods sold Gross profits $ Less: Operating expenses Operating profits $ Less: Interest expense 65% % 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 Metroline Manufacturing Income Statement Breakdown of Costs and Expenses for the Year Just Ended into Fixed and Variable Components Sales revenue $1,410,000 for the Year Just Ended Less: Cost of goods sold 919,000 Cost of goods sold Gross profits $491,000 Fixed cost $217,000 Less: Operating expenses 112,000 Variable cost 702,000 Operating profits $379,000 Total cost $919,000 Less: Interest expense 39,000 Operating expenses Net profits before taxes $340,000 Fixed expenses $32,000 Less: Taxes (rate = 40%) 136,000 Variable expenses 80,000 Net profits after taxes $204.000 Total expenses $112,000 Less: Cash dividends 67,000 To retained earnings $137,000 Print Done
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