Pro forma income statement The marketing department of Metroline Manufacturing estimates that its sales next year will be $1.58 million. Interest expense is expected to remain unchanged at $32,000, and the firm plans to pay $69,000 incash dividends. Metroline Manufacturing's income statement for the previous year is givenalong with a breakdown of the firm's cost of goods sold and operating expenses into their fixed and variable components.a. Use the percent-of-sales method to prepare a pro forma income statement for next year.b. Use fixed and variable cost data to develop a pro forma income statement for next year.c. Compare and contrast the statements developed in parts a. and b. Which statement probably provides the better estimate of income? Explain why.a. Use the percent-of-sales method to prepare a pro forma income statement for the year ended December 31, 2020.Complete the pro forma income statement for the year ended December 31, 2020 below: (Round the percentage of sales to four decimal places and the pro forma income statement amounts to the nearest dollar.)- XPro Forma Income StatementData tableMetroline Manufacturing, Inc.for the Year Ended December 31, 2020(For Breakdown of Costs and Expenses, click on the icon here O in order to copy the contents of the data table below into aspreadsheet.)(percent-of-sales method)Sales1,580,000Metroline ManufacturingMetroline ManufacturingBreakdown of Costs and Expensesinto Fixed and Variable ComponentsLess: Cost of goods sold1,038,21865.7100 %Income StatementGross profits2$541,782for the Year Just EndedSales revenue$1,394,000for the Year Just EndedLess: Operating expensesLess: Cost of goods sold916,000Cost of goods soldFixed cost$216,000Gross profitsLess: Operating expensesOperating profits$478,000Less: Interest expense32,000124,000Variable cost700,000$354,000Total cost$916,000Operating profitsLess: Interest expenseNet profits before taxes2$32,000Operating expensesFixed expensesLess: TaxesNet profits before taxes$322,000$40,000Less: Taxes (rate = 40%)128,800Variable expenses84,000Net profits after taxes$193,200Total expenses$124,000Help me solve thisView an exampleGet more help -Less: Cash dividends64,000To retained earnings$129,200 Metroline Manufacturing, Inc.for the Year Ended December 31, 2020(percent-of-sales method)Sales$1,580,000Less: Cost of goods sold1,038,21865.7100 %Gross profits541,782Less: Operating expenses%Operating profitsLess: Interest expense32,000Net profits before taxesLess: TaxesNet profits after taxesLess: Cash dividends69,000To retained earnings%24

Income statement Dec 31 2019 sales 1,394,000 less cost of goods sold…

Pro forma income statement The marketing department of Metroline Manufacturing estimates that its sales next year will be $1.58 million. Interest expense is expected to remain unchanged at $32,000, and the firm plans to pay $69,000 in cash dividends. Metroline Manufacturing's income statement for the previous year is given , along with a breakdown of the firm's cost of goods sold and operating expenses into their fixed and variable components. a. Use the percent-of-sales method to prepare a pro forma income statement for next year. b. Use fixed and variable cost data to develop a pro forma income statement for next year. c. Compare and contrast the statements developed in parts and b. Which statement probably provides the better estimate of income? Explain why.

Pro forma income statement The marketing department of Metroline Manufacturing estimates that its sales next year will be $1.58 million. Interest expense is expected to remain unchanged at $32,000, and the firm plans to pay $69,000 in cash dividends. Metroline Manufacturing's income statement for the previous year is given , along with a breakdown of the firm's cost of goods sold and operating expenses into their fixed and variable components. a. Use the percent-of-sales method to prepare a pro forma income statement for next year. b. Use fixed and variable cost data to develop a pro forma income statement for next year. c. Compare and contrast the statements developed in parts and b. Which statement probably provides the better estimate of income? Explain why.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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