Refer to the financial statements of United Parcel Service in PS-41 to

Refer to the financial statements of United Parcel Service in PS-41 to answer the following requirements. The following assumptions should be useful: UPS's sales forecast for 2018 is $70,000 million.

• Operating expenses and operating profits increase in proportion to sales. Investment income and interest expense are unchanged in 2018.

• Income taxes are 25% of pretax earnings.

• Marketable securities and noncurrent investments are unchanged in 2018; all other assets (except cash) increase in proportion to sales. Long-term debt and current maturities of long-term debt are unchanged in 2018; all other liabilities increase in proportion to sales.

• Dividends are 50% of net income. Income and dividends are the only changes to stockholders· equity in 2018.


REQUIRED:

a. Prepare an income statement forecast for 2018.

b. Prepare a balance sheet forecast for 2018.


Data from PS-41:

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