Forecast an Income Statement Following is the income statement for Medtronic PLC for the year ended April 29, 2016. Consolidated Statements of Income Apr. 29, 2016 Net sales $29,721 Costs and expenses Cost of products sold 9,214 Research and development expense 2,224 Selling, general, and administrative expense 9,469 Special charges (gains), net 70 Restructuring charges, net 290 Certain litigation charges, net 26 Acquisition-related items 283 Amortization of intangible assets 1,931 Other expense, net 107 Operating profit 6,107 Interest expense, net 955 Income from operations before income taxes 5,152 Provision for income taxes 979 Net income $4,173 Use the following assumptions to prepare a forecast of the company's income statement for FY2017. Net sales increase 18% Cost of products sold 31.7% of net sales Research and development expense 7.7% of net sales Selling, general, and administrative expense 32.8% of net sales Special charges (gains), net $0 Certain litigation charges, net $0 Restructuring charges, net 75% of 2016 expense Acquistion-related items 1% of net sales Amortization of intangible assets No change Other expense, net and Interest expense, net No change Provision for income taxes 20% of pre-tax income Instructions: Round answers to the nearest whole number. Use rounded answers for any subsequent computations. Do not use negative signs with any of your answers.

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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Forecast an Income Statement

Following is the income statement for Medtronic PLC for the year ended April 29, 2016.

Consolidated Statements of Income	Apr. 29, 2016
Net sales	$29,721
Costs and expenses
Cost of products sold	9,214
Research and development expense	2,224
Selling, general, and administrative expense	9,469
Special charges (gains), net	70
Restructuring charges, net	290
Certain litigation charges, net	26
Acquisition-related items	283
Amortization of intangible assets	1,931
Other expense, net	107
Operating profit	6,107
Interest expense, net	955
Income from operations before income taxes	5,152
Provision for income taxes	979
Net income	$4,173

Use the following assumptions to prepare a forecast of the company's income statement for FY2017.

Net sales increase	18%
Cost of products sold	31.7% of net sales
Research and development expense	7.7% of net sales
Selling, general, and administrative expense	32.8% of net sales
Special charges (gains), net	$0
Certain litigation charges, net	$0
Restructuring charges, net	75% of 2016 expense
Acquistion-related items	1% of net sales
Amortization of intangible assets	No change
Other expense, net and Interest expense, net	No change
Provision for income taxes	20% of pre-tax income

Instructions:

Round answers to the nearest whole number.
Use rounded answers for any subsequent computations.
Do not use negative signs with any of your answers.

in Millions	EST. 2017
Medtronic Inc.
Forecasted Consolidated Statement of Income
Net sales	Answer
Costs and expenses
Cost of products sold	Answer
Research and development expense	Answer
Selling, general, and administrative expense	Answer
Restructuring charges, net	Answer
Acquisition-related items	Answer
Amortization of intangible assets	Answer
Other expense, net	Answer
Operating profit	Answer
Interest expense, net	Answer
Income from operations before income taxes	Answer
Provision for income taxes	Answer
Net income	Answer

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