Peabody & Peabody has 2015 sales of $10.2 million. Itwishes to analyze expected
ID: 2753488 • Letter: P
Question
Peabody & Peabody has 2015 sales of $10.2 million. Itwishes to analyze expected performance and financing needs for 2017, which is-- 2 years ahead. Given the following information, respond to parts a and b.
(1)The percents of sales for items that vary directly with sales are as follows: Accounts receivable, 11.7%; Inventory, 17.6%; Accounts payable, 13.7%; Net profit margin, 2.7%
(2) Marketable securities and other current liabilities are expected to remain unchanged.
(3) A minimum cash balance of $483,000 is desired.
(4) A new machine costing $650,000 will be acquired in 2016, and equipment costing $848,000 will be purchased in 2017. Total depreciation in 2016 is forecast as $286,000, and in 2017 $393,000 of depreciation will be taken.
(5) Accruals are expected to rise to $501,000 by the end of 2017.
(6) No sale or retirement of long-term debt is expected.
(7) No sale or repurchase of common stock is expected.
(8) The dividend payout of 50% of net profits is expected to continue.
(9) Sales are expected to be $11.4 million in 2016 and $11.1 million in 2017.
(10) The December 31, 2015, balance sheet is here.
Balance Sheet December 31, 2015
Total liabilites and
stockholders' equity $7,607,000
a. Prepare a pro forma balance sheet dated December 31, 2017.
__________________________________________________________________
a. Prepare a pro forma balance sheet dated December 31, 2017.
Complete the assets part of the pro forma balance sheet for Peabody & Peabody for December 31, 2017 below: (Round to the nearest dollar.)
Peabody & Peabody Balance Sheet December 31, 2015 ($000)
Assets
Current Assets
Cash $?
Marketable Securities $?
Accounts receivable $?
Inventories $?
Total current assets $?
Net fixed assets $?
Total assets $?
Complete the liabilities and stockholders' equity part of the pro forma balance sheet for Peabody & Peabody for December 31, 2017 below. (Round to the nearest dollar.)
___________________________________________________________________
Liabilities and stockholders' equity
Current liabilities
Accounts payable $?
Accurals $?
Other current liabilities $?
Total current liabilities $?
Long-term debt $?
Total liabilities $?
Common stock and Retained Earnings $?
External funds required $?
Total liabilities and stockholders' equity $?
Assets Liabilities and Stock Holders' Equity Cash $402,000 Accounts Payable $1,398,000 Marketable securities $202,000 Accurals $400,000 Accounts Receivable $1,201,000 Other current liabilities $80,400 Inventories $1,803,000 Total current liabilities $1,878,400 Total current assets $3,608,000 Long-term debt $2,013,600 Net fixed assets $3,999,000 Common stock $3,715,000 Total assets $7,607,000Total liabilites and
stockholders' equity $7,607,000
Explanation / Answer
Solution :
Assets
Current Assets
Cash
483,000
Marketable Securities
202,000
Accounts receivable (11.1m*11.7%)
1,298,700
Inventories (11.1m*17.6%)
1,953,600
Total current assets
3,937,300
Net fixed assets
=3990000+650000+848000-286000-393000
4,809,000
Total assets
8,746,300
Liabilities and stockholders' equity
Current liabilities
Accounts payable (11.1m* 13.7%)
1,520,700
Accurals
501,000
Other current liabilities
80,400
Total current liabilities
2,102,100
Long-term debt
2,013,600
Total liabilities
4,115,700
Common stock and Retained Earnings
(3715000+153900+149850)
4,018,750
External funds required (8746300-4115700)
4,727,550
Total liabilities and stockholders' equity
8,746,300
Assets
Current Assets
Cash
483,000
Marketable Securities
202,000
Accounts receivable (11.1m*11.7%)
1,298,700
Inventories (11.1m*17.6%)
1,953,600
Total current assets
3,937,300
Net fixed assets
=3990000+650000+848000-286000-393000
4,809,000
Total assets
8,746,300
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.