Question

Allen Products. Inc. Income Statement for the Year Ended December 31, 2019 Sales revenue Less: cost of good sold Gross profits Less: operating expenses Operating profits Less: interest expense Net profit before taxes Less: taxes (rate 30%) Net profits after taxes $936,700 443,996 5492,704 211,694 $281,010 29,038 5251,972 75,592 $176,380

Answer 1

a.

Proforma Income Statement
Allen Products, Inc.
for the Year Ended December 31, 2020
	Pessimistic
Sales	905000
Less: Cost of goods sold	428970	47.4%
Gross profits	476030
Less: Operating expense	204530	22.6%
Operating profits	271500
Less: Interest expense	28055	3.1%
Net profits before taxes	243445
Taxes (30%)	73034
Net profits after taxes	170411

Proforma Income Statement
Allen Products, Inc.
for the Year Ended December 31, 2020
	Most Likely
Sales	1120000
Less: Cost of goods sold	530880	47.4%
Gross profits	589120
Less: Operating expense	253120	22.6%
Operating profits	336000
Less: Interest expense	34720	3.1%
Net profits before taxes	301280
Taxes (30%)	90384
Net profits after taxes	210896

Proforma Income Statement
Allen Products, Inc.
for the Year Ended December 31, 2020
	Optimistic
Sales	1271000
Less: Cost of goods sold	602454	47.4%
Gross profits	668546
Less: Operating expense	287246	22.6%
Operating profits	381300
Less: Interest expense	39401	3.1%
Net profits before taxes	341899
Taxes (30%)	102570
Net profits after taxes	239329

Working:

December 31, 2019		% of sales
Sales	936700	100.0%
Cost of goods sold	443996	47.4%
Operating expense	211694	22.6%
Interest expense	29038	3.1%