Table 4.4 Use the Percent-Of-Sales Method to Prepare a Pro Forma Income

question 49

Multiple Choice

Table 4.4
Use the percent-of-sales method to prepare a pro forma income statement for the year ended December 31, 2015, for Hennesaw Lumber, Inc.
Hennesaw 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 2015. Hennesaw Lumber, Inc.'s income statement for the year ended December 31, 2014 is shown below. From your preparation of the pro forma income statement, answer the following multiple choice questions.
-The pro forma cost of goods sold for 2015 is ________. (See Table 4.4)

• A) $3,500,000
• B) $3,750,000
• C) $3,825,000
• D) $4,000,000

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Definitions:

Experimental Controls

The use of techniques in scientific experiments to minimize the effects of variables other than the independent variable, ensuring the results are due to the variable being tested.

Information-Processing Model

A cognitive approach that uses the analogy of a computer to explain how human mind manages information.

Psychodynamic

Relating to a psychological approach that emphasizes systematic study of the psychological forces that underlie human behavior, feelings, and emotions and how they might relate to early experience.

Heuristic Model

A mental shortcut or rule-of-thumb that simplifies decision making, not guaranteed to be perfect, but useful for practical problem-solving.