(TCO D) Anthony Gray has been interested in music since he was old enough to sit at the piano. He grew up with music and used his talent to earn his way through college. Anthony has now grown tired of his job at a large music house in Houston and is seriously considering moving back to his hometown in Massachusetts to open a small music shop. In researching this venture, Anthony notices that he must include a projected income statement in his loan application.

Using Anthony’s target income of $23,000 and the following statistics from Robert Morris Associates’ Annual Statement Studies, construct a pro forma income statement for Anthony’s proposed music shop.

Net sales                                      100.0%
Cost of sales                                 59.9%
Gross profit                                   40.1%
Operating expenses                       31.2%
Net profit (before taxes)                  8.9%