Using the 2012 financial statements for DRE Corporation and this additional info
ID: 2767138 • Letter: U
Question
Using the 2012 financial statements for DRE Corporation and this additional information, prepare a pro forma income statement and balance sheet for the year 2013. Determine the discretionary financing needed (DFN) and assume that if the DFN is positive, the company will increase long-term debt, and if DFN is negative, the company will pay back some long-term debt.
Sales for next year (2013) are expected to increase by $300,000 to $1,800,000. The firm is running efficiently and at full capacity so that all assets and spontaneous liabilities are expected to increase proportionally with sales. The dividend payout ratio for 2013 will be 40%.
DRE Corporation
2012 Financial Statements
Income Statement ($)
Sales
1,500,000
Net Income
250,000
Balance Sheet ($)
Cash
400,000
Accounts Receivable
450,000
Inventory
350,000
Property, Plant, & Equipment
650,000
Total Assets
1,850,000
Accounts Payable
200,000
Short Term Notes Payable
250,000
Long-term Debt
550,000
Common Stock
200,000
Retained Earnings
650,000
Total Liabilities and Equity
1,850,000
Income Statement ($)
Sales
1,500,000
Net Income
250,000
Balance Sheet ($)
Cash
400,000
Accounts Receivable
450,000
Inventory
350,000
Property, Plant, & Equipment
650,000
Total Assets
1,850,000
Accounts Payable
200,000
Short Term Notes Payable
250,000
Long-term Debt
550,000
Common Stock
200,000
Retained Earnings
650,000
Total Liabilities and Equity
1,850,000
Explanation / Answer
*Discretionary financing needed is $ 100,000.
Proforma Income Statement for the year 2013:
Proforma Balance Sheet as of December 31, 2013:
2012 2013 Sales $1,500,000 (100%) $1,800,000 Current assets $ 1,200,000 ( 80%) $ 1,440,000 Property, plant and equipment $ 650,000 ( 43.33%) $ 780,000 Total Assets $ 1,850,000 $ 2,220,000 Current liabilities $ 450,000 ( 30%) $ 540,000 Long-term debt $ 550,000 ( % NA) $ 550,000 Common Stock $ 200,000 ( % NA) $ 200,000 Retained Earnings $ 650,000 $ 830,000 Discretionary fiancing needed* - $ 100,000 Total liabilities and equity $ 1,850,000 $ 2,220,000Related Questions
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