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    Construction of a pro forma income statement

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    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.

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    Solution Summary

    This solution constructs a pro forma income statement for two years in the given case.