Consider the following income statement for the Heir Jordan Corporation: HEIR JORDAN CORPORATION Income Statement Sales $ 42,900 Costs 33,900 Taxable income $ 9,000 Taxes (21%) 1,890 Net income $ 7,110 Dividends $ 2,509 Addition to retained earnings 4,601 The balance sheet for the Heir Jordan Corporation follows. HEIR JORDAN CORPORATION Balance Sheet Assets Liabilities and Owners’ Equity Current assets Current liabilities Cash $ 2,250 Accounts payable $ 4,000 Accounts receivable 5,100 Notes payable 8,000 Inventory 8,000 Total $ 12,000 Total $ 15,350 Long-term debt $ 22,000 Owners’ equity Fixed assets Common stock and paid-in surplus $ 10,000 Net plant and equipment $ 36,800 Retained earnings 8,150 Total $ 18,150 Total assets $ 52,150 Total liabilities and owners’ equity $ 52,150 Prepare a pro forma balance sheet, assuming an increase in sales of 14 percent, no new external debt or equity financing, and a constant payout ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) HEIR JORDAN CORPORATION Pro Forma Balance Sheet Assets Liabilities and Owners’ Equity Current assets Current liabilities Cash Accounts payable Accounts receivable Notes payable Inventory Total Total Long-term debt Owners’ equity Fixed assets Common stock and paid-in surplus Net plant and equipment Retained earnings Total Total assets

Consider the following income statement for the Heir Jordan Corporation: HEIR JORDAN CORPORATION Income Statement Sales $ 42,900 Costs 33,900 Taxable income $ 9,000 Taxes (21%) 1,890 Net income $ 7,110 Dividends $ 2,509 Addition to retained earnings 4,601 The balance sheet for the Heir Jordan Corporation follows. HEIR JORDAN CORPORATION Balance Sheet Assets Liabilities and Owners’ Equity Current assets Current liabilities Cash $ 2,250 Accounts payable $ 4,000 Accounts receivable 5,100 Notes payable 8,000 Inventory 8,000 Total $ 12,000 Total $ 15,350 Long-term debt $ 22,000 Owners’ equity Fixed assets Common stock and paid-in surplus $ 10,000 Net plant and equipment $ 36,800 Retained earnings 8,150 Total $ 18,150 Total assets $ 52,150 Total liabilities and owners’ equity $ 52,150 Prepare a pro forma balance sheet, assuming an increase in sales of 14 percent, no new external debt or equity financing, and a constant payout ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) HEIR JORDAN CORPORATION Pro Forma Balance Sheet Assets Liabilities and Owners’ Equity Current assets Current liabilities Cash Accounts payable Accounts receivable Notes payable Inventory Total Total Long-term debt Owners’ equity Fixed assets Common stock and paid-in surplus Net plant and equipment Retained earnings Total Total assets

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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Question

Consider the following income statement for the Heir Jordan Corporation:

HEIR JORDAN CORPORATION Income Statement
Sales			$	42,900
Costs				33,900

Taxable income			$	9,000
Taxes (21%)				1,890

Net income			$	7,110

Dividends	$	2,509
Addition to retained earnings		4,601

The balance sheet for the Heir Jordan Corporation follows.

HEIR JORDAN CORPORATION Balance Sheet
Assets		Liabilities and Owners’ Equity
Current assets			Current liabilities
Cash	$	2,250	Accounts payable	$	4,000
Accounts receivable		5,100	Notes payable		8,000

Inventory		8,000	Total	$	12,000

Total	$	15,350	Long-term debt	$	22,000

			Owners’ equity
Fixed assets			Common stock and paid-in surplus	$	10,000
Net plant and equipment	$	36,800	Retained earnings		8,150

			Total	$	18,150

Total assets	$	52,150	Total liabilities and owners’ equity	$	52,150

Prepare a pro forma balance sheet, assuming an increase in sales of 14 percent, no new external debt or equity financing, and a constant payout ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

HEIR JORDAN CORPORATION
Pro Forma Balance Sheet
Assets	Liabilities and Owners’ Equity
Current assets		Current liabilities
Cash		Accounts payable
Accounts receivable		Notes payable
Inventory		Total
Total		Long-term debt
		Owners’ equity
Fixed assets		Common stock and paid-in surplus
Net plant and equipment		Retained earnings
		Total
Total assets		Total liabilities and owners’ equity

Calculate the EFN.

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