Question

Using the income statement from Folder Factory Financials Folder Factory Financials , prepare a pro forma income statement for 2016 if the company projects sales to be $60,000 in 2016.

Balance Sheet Folder Factory, Inc. December 31, 2014 and 2015
			2015				2014
Assets
Cash			$ 1,000				$     500
Accounts receivable			5,000				4,500
Inventory			7,000				6,000
Total current assets			$13,000				$11,000
Gross fixed assets	$20,000				$15,000
Less: Accumulated depreciation	10,000				9,000
Net fixed assets			$10,000				$ 6,000
Total assets			$23,000				$17,000
Liabilities and stockholders’ equity
Accounts payable			$ 2,000				$ 1,500
Notes payable			3,000				2,500
Accruals			500				500
Long-term debt			10,000				6,000
Common stock at par ($1 par)			500				500
Paid-in capital in excess of par			5,500				5,500
Retained earnings			1,500				500
Total liabilities and stockholders’ equity			$23,000				$17,000

Income Statement Folder Factory, Inc. for the Year Ended December 31, 2015
Sales	$40,000
Cost of goods sold	21,000
Gross profits	$19,000
Operating expenses	13,000
Operating profits	$ 6,000
Interest expense	2,000
Net profits before taxes	$ 4,000
Taxes (40%)	1,600
Net profits after taxes	$ 2,400

Other information (2015):

Depreciation Expense                         $1000

Tax rate 40%

Operating Profits = Earnings before interest and taxes

Answer 1

Income Statement
Folder Factory, Inc.
for the Year Ended December 31	2015	2016
Sales	$40,000	60000
Cost of goods sold	21,000	$31,500
Gross profits	$19,000	$28,500
Operating expenses	13,000	$19,000
Operating profits	$6,000	$9,500
Interest expense	2000	2000
Net profits before taxes	$4,000	$7,500
Taxes 40%	1600	$3,000
Net profits after taxes	$2,400	$4,500

NOTES

Cost of goods sold = 2015 COGS * sales of 2016/sales of 2015

Depreciation assumed to remain constant

Other operating expenses = 12000*sales of 2016/sales of 2015

Interest assumed to be constant

WORKINGS