Use the percent-of-sales method to prepare a pro forma income statement for the year ended December 31, 2019, for Hennesaw Lumber, Inc. Hennesaw Lumber, Inc. estimates that its sales in 2019 will be $4,500,000. Interest expense is to remain unchanged at $105,000 and the firm plans to pay cash dividends of $150,000 during 2019. Hennesaw Lumber, Inc.'s income statement for the year ended December 31, 2018 is shown below. From your preparation of the pro forma income statement, answer the following multiple choice questions.

Use the percent-of-sales method to prepare a pro forma income statement for the year ended December 31, 2019, for Hennesaw Lumber, Inc.

The pro forma net profits after taxes for 2019 are ________. (See Table 4.4)

		$57,000
		$122,550
		$272,550
		$207,000

Income Statement Hennesaw Lumber, Inc. For the Year Ended December 31, 2018 Sales Revenue Less: Cost of goods sold Gross profits Less: Operating expenses Operating profits Less: Interest expense Net profits before taxes Less: Taxes (21%) Net profits after taxes Less: Cash dividends To: Retained earnings $4,200,000 3,570,000 $ 630,000 210,000 $ 420,000 105,000 s 315,000 66,150 S 248,850 120,000 S 128,850