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

question 171

Multiple Choice

Table 4.4
Use the percent-of-sales method to prepare a pro forma income statement for the year ended December 31, 2010, 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 2010. Hennesaw Lumber, Inc.'s income statement for the year ended December 31, 2009 is shown below. From your preparation of the pro forma income statement, answer the following multiple choice questions.
-The pro forma net profits after taxes for 2010 are ________. (See Table 4.4)

• A) $202,500
• B) $207,000
• C) $52,500
• D) $57,000

Interpret graphical representations of markets with externalities to identify equilibrium and socially optimal outcomes.

Analyze the role of government intervention in correcting market failures due to externalities through taxes and subsidies.

Differentiate between private and social costs, and private and social values.

Identify the conditions for social optimality in the presence of externalities.

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Definitions:

Republican Candidates

Individuals running for office who are members of the Republican Party, one of the two major political parties in the United States.

Rural Area

A geographic area characterized by low population density, agricultural or natural settings, and limited urban development.

Libertarian Republicans

A faction within the Republican Party that emphasizes individual liberties, free market principles, and a more limited government than traditionally advocated by the party.

Government Regulation

The establishment of rules by authorities governing behavior, activities, and standards for individuals and organizations, typically enforced by penalties.