How to compile the pro forma income statement for the year

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Bells Manufacturing estimates that the sales for the 2016 financial year will be $2.25 million. No new borrowing was obtained and, therefore, the interest expense remained unchanged at $24,500. Bells Manufacturing is planning on paying cash dividends of $85,000 during 2016. Refer to the financial data for the year ended December 31, 2015, while answering the following:

Question a. Compile the pro forma income statement for the year ended December 31, 2016, using the percentage-of-sales method.

Question b. Compile the pro forma income statement for the year ended December 31, 2016, using the fixed and variable cost data.

Reference no: EM132571292

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