Construct a pro forma income statement for the first year and second year for the following assumptions:
-Units of Sales in Year 1: 110,000
-Price per Unit: $11
-Variable cost per unit: 25%
-Fixed Costs: $129,000
-Income taxes: 20%
-Interest Expense: $170,000
In year 2, Price per unit increases to $13.50, and unit of sales increases by 4%, all other assumptions remain the same.© BrainMass Inc. brainmass.com October 25, 2018, 8:06 am ad1c9bdddf
Please refer attached file for better clarity.
Proforma Income Statement
Year 1 Year 2
Solution demonstrates the pro forma income statement for two years in the given case.
Financial Management: Creating Pro Forma Statements
Consider the following simplified financial statements for the Fire Corporation (assuming no income taxes):
Income Statement Balance Sheet
Sales $ 46,900 Assets $ 22,700 Debt $ 6,700
Costs 41,140 Equity 16,000
Net income $ 5,760 Total $ 22,700 Total $ 22,700
The company has predicted a sales increase of 18 percent. It has predicted that every item on the balance sheet will increase by 18 percent as well.
Create the pro forma statements and reconcile them.
Pro forma income statement Pro forma balance sheet
Sales $ Assets $ Debt $
Net income $ Total $ Total $
What is the plug variable?
The plug variable is in the amount of $ .