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Prepare a pro forma income statement assuming costs vary

Calculating Retained Earnings from Pro Forma Income

Consider the following income statement for the Heir Jordan Corporation:

HEIR JORDAN CORPORATION Income Statement
Sales		$24,000
Costs		13,500
Taxable income		$10,500
Taxes (34%)		3,570
Net income		$ 6,930
Dividends	$2,426
Addition to retained earnings	4,504

A20 percent growth rate in sales is projected. Prepare a pro forma income statement assuming costs vary with sales and the dividend payout ratio is constant. What is the projected addition to retained earnings?

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Accounting Basics: Prepare a pro forma income statement assuming costs vary

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