2. Barry's Superstore wishes to prepare financial plans. Use the financial statements onthe next page and the other information provided below to prepare the financial plans.The following financial data are also available:(1) The firm has estimated that its sales for next year will be $130,000.(2) The firm expects to pay $30,000 in cash dividends.(3) The firm wishes to maintain a minimum cash balance of $25,000.(4) Accounts receivable represent approximately 20% of annual sales.(5) The firm's ending inventory represents 60% of Cost of Goods Sold.(6) A new machine costing $15,000 will be purchased next year.(7) Accounts payable will increase by 5%.(8) Unearmed Revenue will be earned.(9) Notes Payable would decrease by $5000.(10) Short-Term Investments and common stock will remain unchanged.Requirement:a. Prepare a pro forma income statement for the year ended December 31, 2021, usingthe percent-of-sales method. Tax Rate is expected to be 15%.b. Prepare a pro forma balance sheet dated December 31, 2021, using the judgmentalapproach.c. Analyze these statements, and discuss the resulting external financing required BARRY'S SUPERSTOREBARRY'S SUPERSTOREComparative Year-End Income StatementsComparative Year-End Balance SheetsPrior YearCurrent YearPrior Year Current YearAssets:CashNet Sales$100,000$120,000Cost of Goods Sold50.00060,000$90,000$110,000Gross Profit50,00060,000Accounts Receivable20,00030,00035,00015,000160,00040,000$200.000Inventory40,0005,00020,000200.00050,000$250.000Rent ExpenseDepreciation Expense5,500Short-Term Investments2.5003,600Total Current AsstesSalaries ExpenseUtlity Expense3,0005,400EquipmentTotal Assets1.5002,500Operating Income38,00043,000Liabilities:$ 75.00025.000100,000Accounts Payable$ 60.000Interest Expense3,0002,000Unearned Revenue10.000Income Tax Expense70,0005.000$ 30,0006,000Total Current LiabilitiesNet Income$ 35,000Notes PayableTotal Liabilities40,000110,00050,000150.000Stockholder EquityCommon Stock75,00080.000Ending Retained EarningsTotal Stockholder EquityTotal Liabilities and Stockholder Equity20.000100.00015,00090,000$200.000$250.000

2. Barry's Superstore wishes to prepare financial plans. Use the financial statements on the next page and the other information provided below to prepare the financial plans. he following financial data are also available: 1) The firm has estimated that its sales for next year will be $130,000. 2) The firm expects to pay $30,000 in cash dividends. 3) The firm wishes to maintain a minimum cash balance of $25,000. 4) Accounts receivable represent approximately 20% of annual sales. 5) The firm's ending inventory represents 60% of Cost of Goods Sold. 6) A new machine costing $15,000 will be purchased next year. 7) Accounts payable will increase by 5%. 8) Uneamed Revenue will be earned. 9) Notes Payable would decrease by $5000. 10) Short-Term Investments and common stock will remain unchanged. Requirement: a. Prepare a pro forma income statement for the year ended December 31, 2021, using he percent-of-sales method. Tax Rate is expected to be 15%. b. Prepare a pro forma balance sheet dated December 31, 2021, using the judgmental pproach

2. Barry's Superstore wishes to prepare financial plans. Use the financial statements on the next page and the other information provided below to prepare the financial plans. he following financial data are also available: 1) The firm has estimated that its sales for next year will be $130,000. 2) The firm expects to pay $30,000 in cash dividends. 3) The firm wishes to maintain a minimum cash balance of $25,000. 4) Accounts receivable represent approximately 20% of annual sales. 5) The firm's ending inventory represents 60% of Cost of Goods Sold. 6) A new machine costing $15,000 will be purchased next year. 7) Accounts payable will increase by 5%. 8) Uneamed Revenue will be earned. 9) Notes Payable would decrease by $5000. 10) Short-Term Investments and common stock will remain unchanged. Requirement: a. Prepare a pro forma income statement for the year ended December 31, 2021, using he percent-of-sales method. Tax Rate is expected to be 15%. b. Prepare a pro forma balance sheet dated December 31, 2021, using the judgmental pproach

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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