Question

Question 2......... ....(10 marks) Income Statement Sony Corp Company For the Year Ended December 31, 2015 Sales $2,800,000 Less: Cost of goods sold 1,820,000 Gross profits $980,000 Less: Operating expenses 240.000 Operating Profits $ 740,000 Less: Interest expense 70,000 Net profits before taxes $ 670,000 Less: Taxes (40%) 268,000 Net profits after taxes $ 402,000 Less: Cash Dividends 132,000 To: Retained earnings $ 270,000 Sony corp. estimates its sales in 2016 will be $3 million. Interest expense is expected to remain unchanged at $70,000, and the firm plans to pay cash dividends of $140,000 during 2016. Use the percent-of-sales method to prepare a pro forma income statement for the year ended December 31, 2016, based on the 2015 income statement shown above.

Answer 1

Proforma Income statement for year ended on 21 December, 2016

Particulars	2015 (Actual)	% to sales	2016 (proforma)
Sales	2,800,000	100%	3,000,000
Less : COGS	1,820,000	65%	1,950,000
Gross profits	980,000	35%	1,050,000
Less: Operating exps	240,000	8.5714%	257,142
Operating profits	740,000	26.4286%	792,858
Less: Interest	70,000	-	70,000
Net profit before tax	670,000	-	722,858
Less: Tax (40%)	268,000	-	289,143
Net profit after taxes	402,000	-	433,715
Less: Cash Dividend	132,000	-	140,000
To:Retained Earnings	270,000	-	293,715