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ID: 2728012 • Letter: T
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THIS IS A SECOND POSTING FOR THE SAME QUESTION AS THE PREVIOUS ONE WAS DONE INCORRECTLY!
6. Complete the Projected Income Statement and the Projected Balance Sheet. To do this, you will need to make some assumptions about different accounts’ relationships to each other. a. You start with an assumption of $3.6 million in sales. Also, I’ve given you the current portion of long-term debt and the remaining long-term debt. Both of those items relate to the note where Cartwright bought out the interest of his former partner. b. Make sure the balance sheet balances – that is, the Total Assets must equal the Total Liabilities & Owner’s Equity. Think about where you might have to put a “plug number” to make them balance – which account is most flexible. Note: Use formulas and cell references in your spreadsheet. Do not hardcode numbers.
*** THE QUESTION LISTED ABOVE IS THE ONE I NEED ANSWERED. The entire document is below for reference. Excel Sheets are attached for reference and formatting requirements. ***
Explanation / Answer
Income Statement:
We use the percentage if sales method to calculate the projected net income
For example: The cost of goods sold is 522 when the sales is 718. So the cost of goods sold for the full year 2004 is 522/718 = 72.70%. So COGS = 0.7270 * 3600 =2,617. In this way we have built the income statement.
The interest expense is 247000 * 0.135/2 + 465000*0.105/2 = 41,085 . This represented as 41 (in thousands) in the income statement.
The Income statement is projected as follows:
The balance sheet is prepared in a similar manner and the projected balance sheet for 2004 is as follows:
Income Statement Sales 3600 COGS 2617 Gross Profit 983 Operating expense 879 Interest Expense 41 Net Income before taxes 63 Taxes 16 Net Income before taxes 47Related Questions
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