Provided the income statement below.

		Year 0	Year 1	Year 2
Revenues		17,000
Cost of goods sold		9,200
Gross profit		7,800
SG&A		4,790
Depreciation		1,700
Operating Profit		1,310
Interest expense		155
Income before taxes		1,155
Taxes @35%		404
Net Income		751
Dividends		225
Addition to retained earnings		526

Create pro forma financial statements from the information provided above
Year 1
Sales revenues increase 3.5%
Gross margin is 50%
SG&A increases 1.2%
$2000 of PP&E is purchased on January 1,
New PP&E is depreciated over 10 years
Inventory grows in line with COGS
Assume that all other asset accounts grow in line with sales (3.5%).
Accounts Payable grow in line with COGS
Accrued and deferred income taxes grows in line with taxes.
Long-term debt declines by $200
Unless otherwise stated, liability accounts grow in line with sales (3.5%)
Treasury Stock purchases equal $300
Average interest cost of all interest bearing debt is 1.6%
Dividend payout ratio is 22%
Tax rate is 35%
Funding requirements should be financed with short-term debt
Y2
Sales revenue decline by 2.0%
Gross margin declinesto 48%
Inventory grows in line with COGS
SG&A declines by 1%
$800of PP&E is sold on January 1 for $600 cash. (Gross =$800, Accumulated depreciation = $200)
Annual depreciation expense declines by $ 80
Assume that all other asset accounts grow in line with sales. (-2.0%)
Accounts Payable grow in line with COGS
Long-term debt declines by $150
Accrued and deferred income taxes grows in line with taxes.
Unless otherwise stated, liability accounts grow in line with sales (-2.0%)
Treasury Stock purchase is $100.
Average interest cost of all interest bearing debt is 1.8%
Dividend payout ratio changes to 25%
Tax rate is 35%
Funding requirements should be financed with short-term debt
Excess cash is used to retire short-term debt
100 shares of $1 par value common stock is issued for $300.
Do not add significant amounts to cash unless Loans & notes payable is drawn down to zero.