cated on the top-right corner of the data tables below in order to co Red Queen

Question

cated on the top-right corner of the data tables below in order to co Red Queen Restaurants Income Statement for the Year Ended December 31, 2019 Sales revenue Less. Cost of goods sold $800,000 600,000 Gross profits Less: Operating expenses Net profits before taxes Less: Taxes (rate 21 %) Net profits after taxes Less Cash dividends $200,000 100,000 $100,000 21,000 $79,000 20,000 To retained earnings $59,000 Red Queen Restaurants Balance Sheet December 31, 2019 Liabilities and Stockholders' Equity $32,000 Accounts payable $10 able securities 18.000Taxes pavable Print D Done

Explanation / Answer

a) Red Queen Restaurants Pro Forma Income Statement For the Year Ended December 31,2020 (Percentage of Sale method) Sales $ 900000 Less: Cost of goods sold $ 675000 75% Gross Profit $ 225000 Less: Operating expenses $ 112500 12.50% Net Profit before taxes $ 112500 Less: Taxes (Rate =21%) $ 23625 (112500*21%) Net Profit after taxes $ 88875 Less: Cash Dividend $ 35000 To Retained Earnings $ 53875 b) Red Queen Restaurants Pro Forma Balance Sheet as at December 31, 2020 Assets Liabilities and Stockholder's Equity Cash $ 30000 Accounts Payable $ 112500 Marketable Securities $ 18000 Taxes Payable $ 5906 Accounts Receivable $ 162000 Other Current Liabilities $ 5000 Inventories $ 112500 Total Current Liabilities $ 123406 Total Current assets $ 322500 Long Term Debt $ 200000 Net Fixed Assets $ 375000 Common Stock $ 150000 Retained earnings $ 228875 Total Assets $ 697500 Total Liabilities and Equity $ 702281 External Financing Required $ -4781 Total Liabilities and ShareHolders Equity:                      $697500 c) Based on all these financial statements, it looks like Liabilities and stockholders equity outweights the assets of the company.So External Financing Required is $4781 COGS % COGS/SALES REVENUE *100 600000/800000*100 75 Operating Expenses OPERATING EXPENSES/SALES REVENUE *100 100000/800000*100 12.5 Accounts Receivable 18% of annual sales 18%*900000 162000 Net Fixed Assets Op Bal 350000 Add: Purchase 42000 Less:Depreciation -17000 Net Fixed Assets 375000 Tax Payable 1/4 of Tax Liability 23625/4 5906.25 5906 Retained Earning: op Bal 175000 c.year 53875 228875 Inventory and Accounts Payable Inventory/Sales 100000/800000 12.5 % Accounts Payable/Sales 12.5 % 100000/800000

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