1. Pro Forma Statements [LO1] Consider the following simplified financial statements for the Phillips Corporation (assuming no income taxes): Income Statement Sales Costs $23,000 Assets 16,700 Net income $ 6,300 Balance Sheet Total $15,800 Debt Equity $15,800 Phillips has predicted a sales increase of 15 percent. It has predicted that every item on the balance sheet will increase by 15 percent as well. Create the pro forma statements and reconcile them. What is the plug variable here? Total $ 5,200 10,600 $15,800 2. Pro Forma Statements and EFN [LO1, 2] In the previous question, assume Phillips pays out half of net income in the form of a cash dividend. Costs and assets vary with sales, but debt and equity do not. Prepare the pro forma statements and determine the external financing needed.

1. Pro Forma Statements [LO1] Consider the following simplified financial statements for the Phillips Corporation (assuming no income taxes): Income Statement Sales Costs $23,000 Assets 16,700 Net income $ 6,300 Balance Sheet Total $15,800 Debt Equity $15,800 Phillips has predicted a sales increase of 15 percent. It has predicted that every item on the balance sheet will increase by 15 percent as well. Create the pro forma statements and reconcile them. What is the plug variable here? Total $ 5,200 10,600 $15,800 2. Pro Forma Statements and EFN [LO1, 2] In the previous question, assume Phillips pays out half of net income in the form of a cash dividend. Costs and assets vary with sales, but debt and equity do not. Prepare the pro forma statements and determine the external financing needed.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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