Use the Percent-Of-Sales Method to Prepare a Pro Forma Income

question 22

Multiple Choice

Use the percent-of-sales method to prepare a pro forma income statement for the year ended December 31, 2004, for Saw
Lumber, Inc.

Saw Lumber, Inc. estimates that its sales in 2000 will be $4,500,000. Interest expense is to remain unchanged at $105,000 and the firm plans to pay cash dividends of $150,000 during 2004. The income statement for the year ended December 31, 2003
is shown below.
Income Statement
Saw Lumber, Inc.
For the Year Ended December 31, 2003
$\begin{array}{lc}\text { Sales Revenue } & \$ 4,200,000 \\\text { Less: Cost of goods sold } & 3,570,000 \\& -\cdots \cdots \cdot-\cdot \\\text { Gross profits } & \$ 630,000 \\\text { Less: Operating expenses } & 210,000\\& -\cdots \cdots \cdot-\cdot \\\text { Operating profits } & \$ 420,000 \\\text { Less: Interest expense } & 105,000 \\& -\cdots-. \\\text { Net income before taxes } & \$ 315,000 \\\text { Less: Taxes }(40 \%) & 126,000\\& -\cdots-. \\\text { Net income after taxes } & \$ 189,000 \\\text { Less: Cash dividends } & 120,000 \\& -\cdots-. \\\text { To: Retained earnings }&\$69,000\end{array}$
-The pro forma operating expenses for 2004 are_____________

• A) $200,000
• B) $210,000
• C) $225,000
• D) $150,000

Understand the psychological and cognitive factors contributing to mood disorders.

Recognize the symptoms not associated with depressive or bipolar disorders.

Learn about the relationship between mood disorders and suicide risks.

Understand the concepts and calculations of expected monetary value (EMV) and expected opportunity loss (EOL).

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Definitions:

Negligence Lawsuit

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Partnership Profits

The earnings generated from a business operation that are shared among partners according to the terms of their partnership agreement.

Implied Authority

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