Consider the following income statement for the Heir Jordan Corporation: HEIR JORDAN CORPORATIONIncome StatementSales $ 43,500Cost 34,100 Taxable income $ 9,400Taxes (24%) 2,256 Net income $ 7,144 Dividends$ 2,515 Addition to retained earnings4,629 The balance sheet for the Heir Jordan Corporation follows. HEIR JORDAN CORPORATIONBalance SheetAssets Liabilities and Owners’ Equity Current assets Current liabilities Cash$ 2,550Accounts payable$ 2,400Accounts receivable3,800Notes payable5,100 Inventory9,000Total$ 7,500 Total$ 15,350Long-term debt$ 24,000 Owners’ equity Fixed assets Common stock and paid-in surplus$ 16,000Net plant and equipment$ 38,000Retained earnings5,850 Total$ 21,850 Total assets$ 53,350Total liabilities and owners’ equity$ 53,350 Prepare a pro forma balance sheet, assuming an increase in sales of 15 percent, no new external debt or equity financing, and a constant payout ratio

The question is based on the concept of Financial Accounting.Income Statement Particulars Year 1 Year 2 (Forecasted) Sales 43500 50025 Less Cost 34100 39215 Taxable Income 9400 10810.0 Less: Taxes @24% 2256 2594.40 Net Income 7144 8215.60 Common Stock Dividend Paid 2515 2892.25 Addition to retained Earning 4629 5323.35 Below is the Balance Sheet: Balance Sheet Assets Year 1 Year 2 (Forecasted) Liabilities & owner's Equity Amount Year 2 (Forecasted) Current assets Current liabilities Cash 2550 2932.5 Accounts Payable 2400 2760 Accounts Receivable 3800 4370 Short Term Notes Payable 5100 5100 Inventory 9000 10350 Current assets 15350 17652.5 Current liabilities 7500 7860 Long Term Debt 24000 24000 Fixed Assets Owner's Equity Net Plant and Equipment 38000 43700 Common Stock and Paid-in Surplus 16000 16000 Retained Earnings (5850+5323.35) 5850 11173.35 Total 21850 27173.35 Total Assets 53350 61352.5 Total Liabilities &owner's Equity 53350 59033.35

Answered: Consider the following income statement…

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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Consider the following income statement for the Heir Jordan Corporation:

HEIR JORDAN CORPORATION
Income Statement
Sales		$ 43,500
Cost		34,100

Taxable income		$ 9,400
Taxes (24%)		2,256

Net income		$ 7,144

Dividends	$ 2,515
Addition to retained earnings	4,629

The balance sheet for the Heir Jordan Corporation follows.

HEIR JORDAN CORPORATION
Balance Sheet
Assets		Liabilities and Owners’ Equity
Current assets		Current liabilities
Cash	$ 2,550	Accounts payable	$ 2,400
Accounts receivable	3,800	Notes payable	5,100

Inventory	9,000	Total	$ 7,500

Total	$ 15,350	Long-term debt	$ 24,000

		Owners’ equity
Fixed assets		Common stock and paid-in surplus	$ 16,000
Net plant and equipment	$ 38,000	Retained earnings	5,850

		Total	$ 21,850

Total assets	$ 53,350	Total liabilities and owners’ equity	$ 53,350

Prepare a pro forma balance sheet, assuming an increase in sales of 15 percent, no new external debt or equity financing, and a constant payout ratio

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