Income Statement

Huddleston Manufacturing Company

For the Year Ended December 31, 2008

Sales ..............$2,800,000

Less: Cost of goods sold ...... 1,820,000

Gross profits ........... $ 980,000

Less: Operating expenses ...... 240,000

Operating Profits .......... $ 740,000

Less: Interest expense ........ 70,000

Net profits before taxes ........ $ 670,000

Less: Taxes (40%) ......... 268,000

Net profits after taxes ....... $ 402,000

Less: Cash Dividends ......... 132,000

To: Retained earnings ....... $ 270,000

Huddleston Manufacturing estimates its sales in 2009 will be $3 million. Interest expense is expected to remain unchanged at $70,000, and the firm plans to pay cash dividends of $140,000 during 2009. Use the percent of sales method to prepare a pro forma income statement for the year ended December 31, 2009, based on the 2008 income statement shown above.