Garlington Technologies Inc.'s 2019 financial statements are shown below: Income Statement for December 31, 2019 Sales $4,000,000 Operating costs 3,200,000 EBIT $ 800,000 Interest 120,000 Pre-tax earnings $ 680,000 Taxes (25%) 170,000 Net income 510,000 Dividends $ 190,000
Financing Deficit
Garlington Technologies Inc.'s 2019 financial statements are shown below:
Income Statement for December 31, 2019
Sales | $4,000,000 |
Operating costs | 3,200,000 |
EBIT | $ 800,000 |
Interest | 120,000 |
Pre-tax earnings | $ 680,000 |
Taxes (25%) | 170,000 |
Net income | 510,000 |
Dividends | $ 190,000 |
Cash | $ 160,000 | Accounts payable | $ 360,000 | |
Receivables | 360,000 | Line of credit | 0 | |
Inventories | 720,000 | Accruals | 200,000 | |
Total CA | $1,240,000 | Total CL | $ 560,000 | |
Fixed assets | 4,000,000 | Long-term bonds | 1,000,000 | |
Total Assets | $5,240,000 | Common stock | 1,100,000 | |
RE | 2,580,000 | |||
Total L&E | $5,240,000 |
Suppose that in 2020 sales increase to $4.8 million and that 2020 dividends will increase to $234,000.
Garlington Technologies Inc. Pro Forma Income Statement December 31, 2020 |
||
Sales | $ | |
Operating costs | $ | |
EBIT | $ | |
Interest | $ | |
Pre-tax earnings | $ | |
Taxes (25%) | $ | |
Net income | $ | |
Dividends: | $ | |
Addition to RE: | $ |
Garlington Technologies Inc. Pro Forma Balance Statement December 31, 2020 |
||
Cash | $ | |
Receivables | $ | |
Inventories | $ | |
Total current assets | $ | |
Fixed assets | $ | |
Total assets | $ | |
Accounts payable | $ | |
Line of credit | $ | |
Accruals | $ | |
Total current liabilities | $ | |
LT bonds | $ | |
Common stock | $ | |
$ | ||
Total L&E | $ |
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