Question

What would be a good answer to utilizing the fictitious company tag-it corporation prepare a next year's forecast in a pro forma income statement. tag-it ceo requested a report of a forecast with an increase in total revenue of 20% for next year. prepare a forecast for next year utilizing the percentage of sales method, and complete the column in the forecast section on the excel spreadsheet below. here is the current statement for tag-it.

Answer 1

To prepare a pro forma income statement for Tag-It Corporation, use the percentage of sales method to forecast next year's revenue by increasing the current revenue by 20%. Calculate the forecasted expenses for each category based on the forecasted revenue. Complete the forecast section of the Excel spreadsheet using these calculations.

Step-by-step explanation:

To prepare a pro forma income statement for Tag-It Corporation for next year, we will use the percentage of sales method and increase the total revenue by 20%. First, calculate the increase in sales by multiplying the current total revenue by 20%.

Then, add this increase to the current total revenue to get the forecasted total revenue for next year. Next, calculate the forecasted values for each expense category by multiplying the forecasted total revenue by the percentage of sales for each expense category.

Finally, subtract the forecasted expenses from the forecasted total revenue to get the forecasted net income. Fill in the column in the forecast section of the Excel spreadsheet using these calculations.