1. Sakiwayo, the CFO of Homalco Ltd., is preparing the earnings projection for Quarter 1. The company has a December 31 year end. She has gathered the following information related to the assumptions for the first quarter projections:

Item	Assumption
Sales	$1,760,000
Cost of goods sold	40% of sales
Selling and administration wages	$230,000
Selling and administration other expenses	$185,000
Interest expense	10% annual interest, payable quarterly. Interest is paid quarterly, calculated on the loan balance outstanding at the end of the previous quarter.
Annual depreciation expense	30% of opening capital asset balance and 15% of any purchases made during the year
New capital asset purchases	$450,000
Dividends paid	$360,000

The bank loan balance and capital asset balance as at December 31 were $600,000 and $500,000, respectively. The company has an income tax rate of 28%. Assuming that depreciation is equal to CCA, what is the pro forma net income for Quarter 1?

a) $152,370

b) $261,720

c) $411,570

d) $571,625