Pro forma income statement The marketing department of Metroline Manufacturing estimates that its sales next year will be $$1\mathrm{.}65$ million. Interest expense is expected to remain unchanged at $$31,000,$ and the firm plans to pay $$72,000$ 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

$

Lese: Cost of goods sold

$\%$

Gross brofits

$

a spreadsheet.$)$

$\backslash$table$[[\backslash$table$[[$Metroline N$],[$Income$],[$for the Yea$]],$$$1,396,000,\backslash$table$[[$Metrol$],[$Breakdown$],[$into Fixed an$],[$for the$]],],[$Less: Cost of goods sold,$909,000,$Cost of goods sold,$],[$Gross profits,$$487,000,$Fixed cost,$$213,000$