Question

les Pevenax 477, 750 7. WillieC o will use a percent of sales basis to forecast it's Income Statement for next year. They assume expenses for G&A and Common Dividends will be the same as this year, and that both CoGS and Interest Expense v create a forecasted statement for next year assuming a 29 percent increase in sales ary with sales. Using the following current Income Statement, 2018 2019 Sales COGS Gross Profit G&A Expense EBIT Interest Expense EBT Taxes (25%) Net Income C Stock Div Change in RE $220,000 130,000 90,000 12,000 78,000 2,600 75,400 18,850 56,550 30,000 + 26,550

Answer 1

INCOME STATEMENT	Year - 2018		Year - 2019	Remarks
PARTOCUALRS	AMOUNT	Based on % of Sales	Amount (Forcasted)
Service Revenue (A)	$                     2,20,000	100%	$                     2,83,800	(129% of $ 220,000)
Less: COGS	$                     1,30,000	59%	$                     1,67,700	59% of Sales
Gross Profit	$                         90,000		$                     1,16,100
G&A Expenses	$                         12,000		$                         12,000	No Change
EBIT	$                         78,000		$                     1,04,100
Interest Expenses	$                           2,600	1%	$                           2,838	1 % of Sales
EBT	$                         75,400		$                     1,01,262
Taxes @ 25%	$                         18,850		$                   25,315.50
Net income	$                         56,550		$                         75,947
C Stock Dividend	$                         30,000		$                         30,000
Chnagein Retained Earning	$                         26,550		$                         45,947