Question

A proposed new investment has projected sales of $515,000. Variable costs are 40 percent of sales, and fixed costs are $134,500; depreciation is $52,750. Prepare a pro forma income statement assuming a tax rate of 21 percent. What is the projected net income? (Input all amounts as positive values. Do not round intermediate calculations.)

Sales =

Variable Cost =

Fixed Cost =

Depreciation =

EBT =

Taxes =

Net Income =

Answer 1

Sales = $515,000

Variable cost = 40% of 515,000

Variable cost = $206,000

Fixed costs = 134,500

Depreciation = $52,750

EBT = Sales - variable costs - fixed costs - depreciation

EBT = $515,000 - $206,000 - $134,500 - $52,750

EBT = $121,750

Taxes = 21% of 121,750

Taxes = 25,567.5

Net income = EBT - Tax

Net income = 121,750 - 25,567.5

Net income = $96,182.5

Answer 2

SOLUTION :

                                 Net income statement 

Details                          Amount in ($)                    Amount in ($)

Sales                                                                          515,000.00

Less

  Variable costs            (206,000.00)

  (0.40*557000)        

  Fixed costs                (134,500 .00)                       

                                     

  Depreciation                (52,750.00)                        (393,250.00)

                                                                             ______________

 

EBT                                                                           121,750.00

Less

  Tax                                                                          (25,567.50)

  (0.21*121750)

                                                                                ____________

Net Income                                                                96,182.50

                                                                                 ____________