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

question 68

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 accumulated retained earnings account on the balance sheet is projected to be ________. (See Table 4.4)

• A) $62,500
• B) $52,500
• C) $57,000
• D) $67,000

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Definitions:

Marginal Revenue

Marginal revenue is the additional income generated from selling one more unit of a good or service.

Marginal Revenue

The rise in income achieved by selling an extra unit of a product.

Total Revenue

The overall amount of money generated by a company or entity from its activities, such as sales of goods or services, before any costs or expenses are deducted.

One More Unit

The concept of producing or acquiring an additional unit of a good or service and analyzing its impact on overall operations or outcomes.