1) What is the purpose preparing the pro-forma financial statement?

(b) The marketing department of Zetora Manufacturing estimates that its sales in 2019 will be $1,500,000.

Interest expense is expected to remain unchanged at $36,000, and the firm plans to pay $70,000 in cash dividends during 2019.

Table 1: Zetora Manufacturing Income Statement for the Year Ended December 31, 2018

Sales revenue	$ 1,406,000
Less: Cost of goods sold	908,000
Gross profits	$ 498,000
Less: Operating expenses	115,000
Operating profits	$ 383,000
Less: Interest expense	36,000
Net profits before taxes	$ 347,000
Less: Taxes (rate = 40%)	138,800
Net profits after taxes	$ 208,200
Less: Cash dividends	67,000
Total retained earnings	$ 141,200

Given the information above, use the percentage of sales method to prepare a pro forma income statement for the year ended December 31, 2019