Romney and Associates wishes to forecast its net income for the year 2012. In addition, for planning purposes Romney intends to construct a forecasted statement of cash flows for 2012. Romney has assembled balance sheet and income statement data for 2011 and has forecast a balance sheet for 2012. In addition, Romney has estimated that its sales in 2012 will rise to $3,600 and does not anticipate paying any dividends in the coming year. This information is summarized here.

Instructions:
1. Prepare a forecasted income statement for 2012. Clearly state what assumptions you make.
2. Prepare a forecasted statement of cash flows for 2012. Use the indirect method of reporting cash from operatingactivities.

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Balance Sheet Cash Other current assets Property, plant, and equipment (net) Total assets Accounts payable Bank loans payable Total stockholders' equity Total liabilities and stockholders' equity 2011 2012 Forecasted $ 48 540 700 $1,288 s 40 450 500 $990 $190 500 300 $990 228 400 660 $1,288 Income Statement 2011 2012 Forecasted Sales Cost of goods sold..._... Gross profit Depreciation expense Other operating expenses Operating profit Interest expense Income before taxes.. . Income taxes $3,000 200 $1,800 100 1.440 $3,600 .. 260 50 210 94 Net income $ 126