Use the percent-of-sales method to prepare a pro forma income statement for the year ended December 31, 2004, for Hennesaw Lumber, Inc. Hennesaw…

Use the percent-of-sales method to prepare a pro forma income statement for the year ended

December 31, 2004, for Hennesaw Lumber, Inc.

Hennesaw Lumber, Inc. estimates that its sales in 2000 will be $4,500,000. Interest expense is to

remain unchanged at $105,000 and the firm plans to pay cash dividends of $150,000 during 2004.

Hennesaw Lumber, Inc.’s income statement for the year ended December 31, 2003 is shown below.

From your preparation of the pro forma income statement, answer the following multiple choice

questions.