Use 2011 Income Statement as your base, construct a 2012 Pro Forma Income Statement.Your goal here is to show management what the Income Statement for 2012 will look like based on these assumptions listed below.

After completing your Pro Forma Income Statement, compose a final report to management and discuss the anticipated results of the company in 2012.

Use 2011 Income Statement as your base, then make the adjustments listed below, construct a 2012 Pro Forma Income Statement. Your goal here is to show management what the Income Statement for 2012 will look like based on these assumptions listed below. After completing your Pro Forma Income Statement, compose a final report to management and discuss the anticipated results of the company in 2012. Pro Forma Income Statement for 2012 includes the following Management assumptions. 1) Sales for existing business will remain at $3,300,000, but add $500,000 for new clothing line. 2) Cost of Goods Sold for existing business will remain at $2,250,000. Add $300,000 to Cost of Goods Sold for new clothing line. 3) Selling and Administrative Expenses will increase by 15% with new line. 4) Assume Interest will be $50,000 in 2012. 5) Assume Taxes will be 30% of Earnings Before Taxes for 2012. Morgan Corporation Pro Forma Income Statement For 2012 Sales Cost of Goods Sold Gross Profits Selling and Administrative Expense Depreciation Expense Operating Profit Interest Expense Earnings before taxes Taxes Net Income 2011 2012 $3,300,000 $2,250,000 $1,050,000 $600,000 $100,000 $350,000 $52,000 $298,000 $58,000 $240,000 $3,800,000 $2,550,000 $1,250,000 $690,000 $100,000 $460,000 $50,000 $410,000 $123,000 $287,000 Write a report on your findings. Discuss the trends you see on the 2011 vs. 2012 Income Statements. How much does profits increase as a result of adding the assumed clothing line sales. Does it all seem worth it? What risks do you see with the company if sales that management is assuming here are not achieved? You may be creative with this report