Provincial imports has assembled 2015 financial statement income and balance she
ID: 2753838 • Letter: P
Question
Provincial imports has assembled 2015 financial statement income and balance sheet and financial projections for use in preparing financial plans for the coming year 2016
2015 statement
Sales revenue 5,010,000
Less costs of goods sold 2,759,000
Gross profits 2,251,000
Less operating expense 851,000
Operating profits 1,400,000
Less interest expense 196,000
Net profits before taxes 1,204,000
Less tax ( rate 40%) 481,600
Net profits after tax 722,400
Less cash dividends 325,080
To retained earnings 397,320
Balance Sheet 2015
Assets
Cash: $203,000
Marketable Securities: $216,000
Accounts Receivable: $627,000
Inventories: $498,000 Total
Current Assets: 1,544,000
Net Fixed Assets: 1,400,000
Total Assets: 2,944,000
Liabilities and SE
Accounts Payable: 702,000
Taxes Payable: 95,000
Notes Payable: 197,000
Other Current Liabilities: 4,700
Total Current Liabilities: 998,700
Long Term Debt: 497,300
Common Stock: 70,000
Retained Earnings: 1,378,000
Total Liabilities & Equity: 2,944,000
Info related to financial projections for 2016 is
1: projected sales are 6,008,000
2: cost of goods sold in 2015 include 999,000 in fixed costs
3: operating expense in 2015 include 247,000 in fixed costs
4: interest expense will remain unchanged
5: the firm will pay cash dividends amounting to 45% of net profits after taxes
6: cash and inventories will double
7: marketable securities, notes payable, long term debt, and common stock will remain unchanged
8: accounts receivable, accounts payable, and other current liabilities will change in direct response to the change in sales
9:!a new computer costing 348,000 will be purchased during the year. Total depreciation for the year will be 120,000
10: the tax rate will remain at 40%
Prepare a pro forma for year ended December 31 2016 using fixed cost data to improve the accuracy of the percent of sales method
Sales
Less cost of goods sold=
Gross profits=
Less operating expenses=
Operating profits=
Less interest expenses =
Net profit before taxes =
Less tax rate (40%)=
Net profits after taxes =
Less cash dividends (45%)=
To retained earmings=
Prepare a pro forma balance sheet as of dec 31 2016 using info given and judgemental approach. Include a reconciliation of the retained earnings acct. NOTE taxes payable for 2016 are about 19.4253% of the 2015 taxes on the income statement . The pro forma value is obtained by taking 19.4253% of the 2016 taxes . Complete the assets of the pro forma balance sheet as of dec 31 2016
Cash=
Marketable securities =
Acct receivable =
Inventories=
Total current assets=
Net fixed assets =
Total assets=complete liabilities and equity part of pro forma balance sheet as of December 31 2016 ( judgemental method)
Accounts payable =
Taxes payable =
Notes payable=
Other current liabilities=
Total current liabilities=
Long term debt=
Common stock=
Retained earnings external finds required =
Total liabilities and stockholders equity=
using the judgemental approach the external finds requirement =
Explanation / Answer
1)
Sales = 6,008,000
Less cost of goods sold= 3109595
Gross profits= $ 2,898,405
Less operating expenses= 971,318
Operating profits= 1927087
Less interest expenses = 196000
Net profit before taxes = 1731087
Less tax rate (40%)= 692,419
Net profits after taxes = 1038668
Less cash dividends (45%)= 467401
To retained earmings= $ 571,267
Working
cost of goods sold= (2759000-999000)/5010000* 6008000 + 999000
cost of goods sold= 3,109,595
operating expense = (851000-247000)/5010000* 6008000 + 247000
operating expense = $ 971,318
Tax expenses =1731047*40%
Tax expenses = 692419
Cash Dividend = 45%*1038668
Cash Dividend = 467401
2)
2016
Cash= 406000
Marketable securities =216000
Acct receivable = 751899
Inventories= 996000
Total current assets= 2369899
Net fixed assets = 1628000
Total assets= $ 3997899
complete liabilities and equity part of pro forma balance sheet as of December 31 2016 ( judgemental method)
Accounts payable = 841840
Taxes payable = 134504
Notes payable= 197000
Other current liabilities= 5636
Total current liabilities= 1178980
Long term debt= 497300
Common stock= 70000
Retained earnings external finds required = 1949267
Total liabilities and stockholders equity= 3695547
using the judgemental approach
external fUnds requirement = 3997899 - 3695547
external fUnds requirement = 302352
Working
Cash = 203000*2 = 406000
Inventory = 498000*2 = 996000
Account Recievable = 627000 /5010000* 6008000
Account Recievable = 751899
Account Payable = 702000 /5010000* 6008000
Account Payable = 841840
Other Current Liability = 4700 /5010000* 6008000
Other Current Liability = 5636
Net Fixed Assets = 1400000+ 348000 -120000
Net Fixed Assets = 1628000
Taxes Payable = 19.4253%*692419
Taxes Payable = 134504
Retained earnings = Begining + Addition
Retained earnings = 1378000+ 571267
Retained earnings = 1949267
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.