\nIntroduction<\/p>\n
The intent of this assignment is for you to prepare pro forma financial statements for an organization. This information is important to you because any type of business organization needs to use these statements to project their financial performance. This information is required in order to obtain financing for the business and to be prepared for cash flow needs.<\/p>\n
Instructions<\/p>\n
For this assignment, you will need to use the information provided below to complete the tables as shown. Assume sales will increase by 30% in 2013. You will need to create your own Word doc or Excel spreadsheet to upload your assignment.<\/p>\n
Income Statement<\/p>\n
Vector Manufacturing Income Statement<\/p>\n
\n2012 Actual<\/p>\n
2013
\nPro Forma<\/p>\n
Sales revenue<\/p>\n
$125,000<\/p>\n
\nLess: Cost of goods sold<\/p>\n
\n Fixed cost<\/p>\n
$50,000<\/p>\n
\n Variable cost (40% of sales)<\/p>\n
$50,000<\/p>\n
\n Gross Profit<\/p>\n
$25,000<\/p>\n
\nLess: Operating expenses<\/p>\n
\n Fixed expense<\/p>\n
$5,000<\/p>\n
\n Variable expense (5% of sales)<\/p>\n
$6,250<\/p>\n
\n Operating profits<\/p>\n
$13,750<\/p>\n
\nLess: Interest expense (all fixed)<\/p>\n
$1,000<\/p>\n
\n Net profits before taxes<\/p>\n
$12,750<\/p>\n
\nLess: Taxes (15% of net profit before taxes)<\/p>\n
$1,913<\/p>\n
\n Net profits after taxes<\/p>\n
$10,838<\/p>\n
\nBalance Sheet<\/p>\n
Use the following information and the table below to complete the 2013 balance sheet.<\/p>\n
Minimum cash balance of $5,000 is required.
\nMarketable securities will remain unchanged.
\nAccounts receivable on average represent 45 days of sales (about 1\/8 of year or 12.5%).
\nEnding inventory will remain unchanged.
\nA new machine costing $20,000 will be purchased, and total depreciation for the year is $5,000.
\nPurchases will represent 30% of annual sales. It will take 75 days to pay the accounts payable, so accounts payable should equal 75 days\/365 days or 20.5% of the firm?s purchases.
\nTaxes payable will equal 25% of the firm?s tax liability as shown on the income statement (see ?taxes? on income statement).
\nNotes payable will be used for additional financing needs (?plug?).
\nNo change in other current liabilities is expected.
\nNo changes to long-term debt or common stock are expected.
\nRetained earnings will equal the beginning balance from 2012 plus the 2013 profit (see pro forma income statement). A $5,000 dividend payment will be made in 2013.
\nVector Manufacturing Balance Sheet<\/p>\n
\n12\/31\/12<\/p>\n
12\/31\/13<\/p>\n
Assets<\/p>\n
\nCash<\/p>\n
$5,000<\/p>\n
\nMarketable securities<\/p>\n
$4,000<\/p>\n
\nAccounts receivable<\/p>\n
$12,000<\/p>\n
\nInventories<\/p>\n
$15,000<\/p>\n
\n Total current assets<\/p>\n
$36,000<\/p>\n
\nNet fixed assets<\/p>\n
$50,000<\/p>\n
\n Total assets<\/p>\n
$86,000<\/p>\n
Liabilities and Stockholders’ Equity<\/p>\n
\nAccounts payable<\/p>\n
$6,000<\/p>\n
\nTaxes payable<\/p>\n
$500<\/p>\n
\nNotes payable<\/p>\n
$6,500<\/p>\n
\nOther current liabilities<\/p>\n
$3,000<\/p>\n
\n Total current liabilities<\/p>\n
$16,000<\/p>\n
\nLong-term debt<\/p>\n
$15,000<\/p>\n
\n Total liabilities<\/p>\n
$31,000<\/p>\n
\nCommon stock<\/p>\n
$35,000<\/p>\n
\nRetained earnings<\/p>\n
$20,000<\/p>\n
\n Total liabilities and stockholders’ equity<\/p>\n
$86,000<\/p>\n
\nSubject\tBusiness<\/p>\n
<\/p>\n","protected":false},"excerpt":{"rendered":"
Introduction The intent of this assignment is for you to prepare pro forma financial statements for an organization. This information is important to you because any type of business organization needs to use these statements to project their financial performance. Read More …<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-6782","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/6782","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/comments?post=6782"}],"version-history":[{"count":0,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/6782\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/media?parent=6782"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/categories?post=6782"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/tags?post=6782"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}