The marketing department estimates that sales next year will be $1.5 million. interest expense is expected to remain unchanged at $35,000 and the firm plans to pay $70,000 in cash dividends next year. the income statement for last year appears on the next slide along with a breakdown of the firm’s cost of goods sold and operating expenses into their fixed and variable components. use the percent-of-sales method to prepare a pro forma income statement for next year. use fixed and variable data to develop a pro forma income statement for next year compare and contrast the statements developed in parts a) and b). which statement probably provides the better estimate of income for next year? explain why.

For each of the following situations, indicate whether you agree or disagree with the financial reporting practice employed and state the basic assumption, component, or accounting principle that is applied (if you agree) or violated (if you disagree).wagner corporation adjusted the valuation of all assets and liabilities to reflect changes in the purchasing power of the dollar.spooner oil company changed its method of accounting for oil and gas exploration costs from successful efforts to full cost. no mention of the change was included in the financial statements. the change had a material effect on spooner's financial statements.cypress manufacturing company purchased machinery having a five-year life. the cost of the machinery is being expensed over the life of the machinery.rudeen corporation purchased equipment for $180,000 at a liquidation sale of a competitor. because the equipment was worth $230,000, rudeen valued the equipment in its subsequent balance sheet at $230,000.davis bicycle company received a large order for the sale of 1,000 bicycles at $100 each. the customer paid davis the entire amount of $100,000 on march 15. however, davis did not record any revenue until april 17, the date the bicycles were delivered to the customer.gigantic corporation purchased two small calculators at a cost of $32.00. the cost of the calculators was expensed even though they had a three-year estimated useful life.esquire company provides financial statements to external users every three years.