XYZ Company Pro Forma Income Statement Quarter Ending December 31, 2019 Vertical Analysis Sales Cost of Goods Sold Gross Profit Operating Expenses: Salaries Expense Depreciation Expense Other Operating Expenses Total Operating Expenses Net Income XYZ Company Sales Budget For October, November and December 2019 October November December Total Cash (35%) Credit (65%) Total Assumptions September Sales $68,000 October sales are 2% higher than September November sales are 1% higher than October ,December sales are 2.5% higher than November XYZ Company Cost of Goods Sold Budget For October, November and December 2019 October November December Total Cost of Goods Sold Desired Ending Inventory Total Inventory Required Less Beginning Inventory Purchases Required 3 Assumptions: 4 Cost of Goods Sold=60% of Sales 5 September Ending Inventory-$42,000 6, Desired Ending Inventory $15,000+70% of the Cost of Goods Sold for Current Month 20 XYZ Company Operating Expenses Budget For October, November and December 2019 October November December Total Salaries Expense Depreciation Expense Other Operating Expenses Total Operating Expenses 1 Assumptions: 2 Salaries Expense=15 % of Sales 3 Depreciation Expense-$2,000 per month 4 Other Operating Expenses=10% of Sales 18