Question 10 (4 points) Saved Listen What is proforma tax expense? O 117 76 129 55 PROFORMA ASSUMPTIONS Below is GAP TO's financial statements for 2018 and 19 is 2020. Due to Covid-19 pandemic. GAP Inc expects that sales growth in 2020 will be RESA lower than expected sales growth, GAP Inc. is planning to expand its operations to new cities the planned expansion, GAP Ino received $1,700 additional long-term loan from JP Morgan use this loan to finance the purchase of a new office building. Salaries are expected be Sub condition will lead COGS will be 10 percent lower than the 2019 level. When projecting the 2020 balance sheet: GAP Inc. believed that the nccounts receivable days will be 7 days higher than ACP days of Inst year. Inventory days and accounts payable amount will remain unchanged from 2019 since the business has recently been rewarded with extended payment terms from its suppliers going forward. Current mixturities (CMLTD), minimum cash ratio and dividend payments will remain samo ns in 2019. Tax rate is 14%. Interest rate for long-term loan in 2020 is projected to be 4%. Interest expense on short term debtuis delayed until 2021 (this means apply the interest rate only on long-term debt). Rental expense would be 56 a most Depreciation expense would be the same percentage of gross fixed assets as wus in 2019. With these expectations proforma Net Income will be $794 INCOME STATEMENT Net sales Cost of goods sold Salaries Rental expenses Depr. Expense Interest expense Tax expense Net income (loss) 2018 2015 1,316 1,658 332 673 90 100 26 18 12. 30 560 338 48 71 248 428 BALANCE SHEET Cash Accounts receivable Inventory Total Current Assets GFA Accd depre Net fixed assets Total Assets Accounts payable Bank line of credit Current portion due on term loan Total Current Liabilities Long-term debt Total Liabilities Total equity Total Liabilities and Equity 2018 26 72 85 183 1,138 110 1,028 1,211 39 2019 20 82 78 180 1,575 140 1,435 1,615 52 225 70 70 109 875 984 227 1,211 347 805 1,152 463 1,615