29 Jun Question Q16. Cooley Textile’s 2000 financial statements are shown below.
Question
Q16. Cooley Textile’s 2000 financial statements are shown below.
Balance Sheet
Assets
$ (000)
Liabilities & Equity
$ (000)
Cash (3%)
1,080
Accounts payable (20%)
4,320
Accounts receivable (18%)
6,480
Accruals (7%)
2,880
Inventory (25%)
9,000
Notes payable
2,100
Total current assets
16,560
Total current liabilities
9,300
Fixed assets (35%)
12,600
Mortgage Bonds
3,500
Total debt
12,800
Common stock
3,500
Retained earnings
12,860
29,160
29,160
Income Statement
$ (000)
sales
36,000
Operating cost (90.11%)
32,440
EBIT
3,560
Interest
560
EBT
3,000
Tax (40% of EBT)
1,200
Net income
1,800
Dividend (45% of net income)
810
Retained earnings
990
Suppose 2001 sales are projected to increase by 15% over 2000 sales. Assume that the company was operating at full capacity in 2000, that it cannot sell off any of its fixed assets, and that any required financing will be borrowed as notes payable. Also assume that assets, spontaneous liabilities, and operating costs are expected to increase in proportion to sales. Use the percentage of sales method to develop a pro forma balance sheet and income statement for December 31, 2001. Use the pro forma income statement to determine the addition to retained earnings. Interest, Mortgage Bonds and Common Stocks will remain content.
Q17.
Balance Sheet
Assets
$ (000)
Liabilities & Equity
$ (000)
Cash (5%)
1,800
Accounts payable (20%)
7,200
Accounts receivable (30?%)
10,800
Accruals (7%)
3,472
Inventory (35%)
12,600
Notes payable
2,520
Total current assets
25,200
Total current liabilities
13,192
Fixed assets (60%)
21,600
Mortgage Bonds
5,000
Total debt
18,192
Common stock
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