Assignment:
Create an Excel spreadsheet to organize your answers to the following problem, and submit your Excel file as an attachment by clicking on the appropriate button on this page.
[Hint: I recommend you copy this problem to a Word or Excel document and print it out so that you can work with it in a reasonable manner.]
A company published the following information in its financial statements for its 2015 annual
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Sales
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$76,000
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- Cost of goods sold
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49,000
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Gross profit
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27,000
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- Cash Operating expenses
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$9,000
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- Depreciation
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2,000
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Total Operating Expenses
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11,000
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EBIT
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16,000
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- Interest expense
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840
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EBT
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15,160
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- Tax expense
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5,306
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Net Income
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$9,854
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- Dividends
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3,942
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Addition to retained earnings
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$5,912
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Cash
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$9,000
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Marketable securities
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2,000
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Accounts receivable
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11,000
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Inventories
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7,000
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Fixed Assets, net
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24,000
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Total Assets
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$53,000
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Accounts payable
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$8,000
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Accrued payables
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3,000
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Bonds payable
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12,000
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Common stock
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16,000
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Retained earnings
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14,000
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Total Liabilities and Equity
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$53,000
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Total Liabilities and Equity $53,000
Sales in 2016 are estimated to be $90,000. Cost of goods sold and $5,000 of the cash operating expenses are considered variable costs.
• Depreciation and the remainder of cash operating expenses are considered to be fixed costs.
• Cash, accounts receivable, inventories, accounts payable, and accrued payables are considered to be spontaneous items.
• Marketable securities, net fixed assets, bonds payable, and common stock are discretionary.
• $5,000 of bonds payable at the end of 2015 are considered "current liabilities," and will be repaid in early 2016.
• The company purchased fixed assets of $3,600 in 2016, but depreciation for 2016 will remain the same dollar amount as it was for 2015.
• The firm will maintain its 2015 dividend payout ratio in 2016.
• The income tax rate for 2016 is expected to be the same as it was in 2015.
Required:
Prepare the pro-forma 2016 income statement, balance sheet, and statement of cash flows