Use The Following Information To Prepare A Projected Balance Sheet And Income st
ID: 2592411 • Letter: U
Question
Use The Following Information To Prepare A Projected Balance Sheet And Income statement. Show all Computations.
Actual 2015 Projected 2016
Cash $8,500
Accounts Receivable $21,666
Inventory $43,741
Property And Equipment $177,726
Accumulated depreciation $(8,466)
Total Assets $243,167
Debt $135,000
Common Stock $73,167
Retained earnings $35,000
Total Liabilities And Equities $243,167
Sales $270,000
Cost Of Goods Sold $170,100
Gross profit $99,900
Other Expenses $65,200
Depreciation Expense $8,466
Interest Expense $6,075
Income Before Taxes $20,159
Income Tax Expense $12,238
Net Income $7,921
Assumptions:
Sales Growth 40.00%
Cost Of Goods Sold (% of Sales) 62.00%
Other expenses 15.00% Of Sales Plus $20,000
Capital expenditures None
Depreciation rate (Dep exp/P&E Ending balance) 5.00%
Income Tax Rate 40.00%
Ending Cash Balance $12,000
Debt No Change
Dividend Payout 15.00%
Interest Rate (all Borrowings And Repayments On 1/1) 3.50%
Inventory Turnover 3.00 times
Accounts Receivable Turnover 6.00 times
In addition to the assumptions listed, what other Assumption did you have to make and what were the operational implications of that assumption? Answer in complete sentences. Be clear, concise, and specific.
Explanation / Answer
Note : Inventory Turnover Ratio = Cost of goods sold/ average inventory
3 times = 234,360 / (43,741+closing inventory)*0.5
Closing Inventory = 112499
Accounts Receivables ratio = Sales / average accounts receivable
6 times = 378000/ (21666+closing accounts receivables)*0.5
closing accounts receivables = 104334
Income Statement (Projected) For the year Ended December 31,2016 2016 Sales 3,78,000 Less: Cost of Goods sold 2,34,360 (Opening Inventory +Purchases-Closing Inventory) Gross profit 1,43,640 Less: Other Expenses 76,700 Depreciation 8,463 Interest Expense 4,725 Income before tax 53,752 Tax Expense 21,501 Income After Tax 32,251Related Questions
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