Pro forma income statement The marketing department of Metroline Manufacturing estimates that its sales in 2016 will be $1.62 million. Interest expense is expected to remain unchanged at $39,000 and the firm plans to pay $75,000 in cash dividends during 2016. Metroline Manufacturing's income statement for the year ended December 31, 2015, 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, 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.)

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Pro Forma Income Statement
Metroline Manufacturing, Inc.
for the Year Ended December 31, 2016
(percent-of-sales method)
Sales	$ 1620000
Less: Cost of goods sold		901000		100	%
Gross profits	$	643571
Less: Operating expenses					%
Operating profits	$
Less: Interest expense		39000
Net profits before taxes	$
Less: Taxes
Net profits after taxes	$
Less: Cash dividends		75000
To retained earnings	$