The IMB Corporation had 2010 sales of $100 million. The balance sheet items that
ID: 2682685 • Letter: T
Question
The IMB Corporation had 2010 sales of $100 million. The balance sheet items thatvary directly with sales and the profit margin are as follows:
Percent
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5%
Accounts receivable. . . . . . . . . . . . . . . . . . . . . . 15
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Net fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . 40
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . 15
Accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Profit margin after taxes . . . . . . . . . . . . . . . . . . 10%
The dividend payout rate is 50 percent of earnings, and the balance in retained earnings
at the end of 2008 was $33 million. Common stock and the company
Explanation / Answer
C.pro forma means 'in the form of'. You would prepare the pro forma balance sheet EXACTLY the same way you would prepare an ACTUAL balance sheet. Therefore Balance sheet $ $ Current assets Cash at bank 80,000 Trade debtors 637,000 Inventory 555,000 1,272,000 Non Current assets Motor vehicles 38,000 Delivery Van 20,000 Office furniture 961,000 1,019,000 Total assets 2,291,000 minus Current liabilities Trade creditors 271,000 Tax payable 48,000 Non-current liabilities Loan 50,000 Total liabilities 369,000 Net assets equal 1,922,000 Owners' equity Opening balance 70,000 Add profit 446,000 Less drawings 1,181,000 Ending balance -665,000
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