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

question 92

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

• A) increase $52,500.
• B) decrease $52,500
• C) increase $57,000
• D) decrease $57,000

---

Definitions:

Cakes

Baked goods made from ingredients such as flour, sugar, eggs, and butter, often prepared and decorated for special occasions.

Average Total Cost

The total cost of production divided by the total quantity of output produced.

Mixers

Devices or software used to combine multiple audio signals into one or more output channels.

Cakes

Baked confections made from ingredients like flour, sugar, and eggs, often sweetened and served as a dessert or for special occasions.