Forecasted income statement

- [Instructor] So, let's start with the … Forecasted Income statement. … Sales are forecasted to go up by 20%. … Sales in year one were $1,000. … If they are going to go up by 20%, … they' re going to go up to $1,200. … That's our starting point. … Now, I should stop here for just a moment. … Please realize that the most difficult part of this … whole exercise that we are going to do … is right here, getting the sales forecast. … How much are our sales going to go up? … What's going to happen in our market next year? … What are our competitors going to do? … What's going to happen in the overall economy? … All these complex factors need to come into this estimate … of the sales increase. … If my sales go up by 20%, … what should happen to my cost of goods sold? … Just naturally, I don't need to make … any wild assumptions here. … If I sell 20% more stuff, then I am going … to probably have to buy 20% more stuff from my suppliers. … My cost of goods sold should go up by 20%. … So, last year, my cost of goods sold was $700. …