Pro Martin Shoes, which operates one store in Guelph, Ontario, is forecasting next year's income statement results based on a preliminary 10% increase in sales.

Required:
(a) Complete the 2010 pro forma income statement using the 10% sales increase figure.
(b) Explain whether the store owner should be satisfied about next year's forecast for his store given that several Canadian bank economists are forecasting a recession that will include a 5% contraction in the economy in 2010?

Transcribed Image Text:

2010 Sales Variable costs Fixed costs Net income 2009 $300,000 200,000 65,000 $ 35,000