Question

Problem 10-3 Calculating Projected Net Income [LO1]

A proposed new investment has projected sales of $550,000. Variable costs are 40 percent of sales, and fixed costs are $130,500; depreciation is $50,750. Prepare a pro forma income statement assuming a tax rate of 23 percent. What is the projected net income? (Input all amounts as positive values. Do not round intermediate calculations.)

Answer 1

Income statement Year Ended Amount $550,000 Revenues: Sales revenue less: Expenses: costs depreciation expense Fixed costs $220,000 $50,750 $130,500 Total expenses income before tax less: income tax expense Net income $401,250 $148,750 $34,213 $114,538 [ 148750x0.23]