Create an Excel spreadsheet to organize your answers to the following problem, and submit your Excel file as an attachment by clicking on the appropriate button on this page.
[Hint: I recommend you copy this problem to a Word or Excel document and print it out so that you can work with it in a reasonable manner.]
A company published the following information in its financial statements for its 2015 annual report:
Sales
$76,000
– Cost of goods sold
49,000
Gross profit
27,000
– Cash Operating expenses
$9,000
– Depreciation
2,000
Total Operating Expenses
11,000
EBIT
16,000
– Interest expense
840
EBT
15,160
– Tax expense
5,306
Net Income
$9,854
– Dividends
3,942
Addition to retained earnings
$5,912
Cash
$9,000
Marketable securities
2,000
Accounts receivable
11,000
Inventories
7,000
Fixed Assets, net
24,000
Total Assets
$53,000
Accounts payable
$8,000
Accrued payables
3,000
Bonds payable
12,000
Common stock
16,000
Retained earnings
14,000
Total Liabilities and Equity
$53,000
Sales in 2016 are estimated to be $90,000. Cost of goods sold and $5,000 of the cash operating expenses are considered variable costs.
Depreciation and the remainder of cash operating expenses are considered to be fixed costs.
Cash, accounts receivable, inventories, accounts payable, and accrued payables are considered to be spontaneous items.
Marketable securities, net fixed assets, bonds payable, and common stock are discretionary.
$5,000 of bonds payable at the end of 2015 are considered “current liabilities,” and will be repaid in early 2016.
The company purchased fixed assets of $3,600 in 2016, but depreciation for 2016 will remain the same dollar amount as it was for 2015.
The firm will maintain its 2015 dividend payout ratio in 2016.
The income tax rate for 2016 is expected to be the same as it was in 2015.
Required:
Prepare the pro-forma 2016 income statement, balance sheet, and statement of cash flows
