Pro forma income statement the marketing department of metroline manufacturing estimates that its sales in 2020 will be $1.5 million. Interest expense is expected to
remain unchanged at $35,000, and the firm plans to pay $70,000 in cash dividends during 2010. Metroline Manufacturing's income statement for the year ended December
31, 2019, and a breakdown of the firm's cost of goods the year ended December 31, 2019, and a breakdown of the firm's cost of goods sold and operating expenses into
their fixed and variable components are given below.
a. Use the percent-of-sales method to prepare a pro forma income statement for the year ended December 31, 2020.
b. Use fixed and variable cost data to develop a pro forma income statement for the year ended December 31, 2020.
c. Compare and contrast the statements developed in parts a and b. Which statement probably provides the better estimate of 2020 income? Explain why?
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