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GENETICS COMPANY 2017 BALANCE SHEET Assets LIABILITIES $11,417.00 $1,580.00 CASH ACCOUNTS PAYABLE $1,298.00 ACCOUNTS RECEIVABLE ACCRUED LIABILITIES $3,255.00 INVENTORY $1,603.00 $1,460.00 TOTAL CURRENT LIABILITIES $4,553.00 TOTAL CURRENT ASSETS SHAREHOLDER'S EQUITY $10,511.00 FIXED ASSETS $464.00 TOTAL ASSETS $15,064.00 TOTAL LIABILITIES AND EQUITY $15,064.00 2001 INCOME STATEMENT SALES $11,200.00 $1,680.00 $9,520.00 COST OF GOODS SOLD GROSS PROFIT OPERATING EXPENSE $16,530.00 OPERATING PROFIT -$7,010.00 $790.00 -$7,800.00 INTEREST EXPENSE PROFIT BEFORE TAXES TAXES $0.00 NET PROFIT -$7,800.00 A. GENETICS EXPECTS SALES TO DOUBLE IN THE COMING YEAR B. COST OF GOODS SOLD AS A PERCENT OF SALES WILL REMAIN CONTANT, WHICH MEANS THAT THE GROSS PROFIT MARGIN WILL ALSO REMAIN CONSTANT C. OPERATING EXPENSES AND INTEREST WILL REMAIN THE SAME D. PROFITS BEFORE TAXES WILL BE TAXED AT 20% E. ALL PROFITS WILL BE REINVESTED IN THE COMPANY Questions that you need to answer Question 1: Prepare a pro forma income statement. Question 2: Prepare a pro forma balance sheet. Question 3: Does this company need external financing?

GENETICS COMPANY 2017 BALANCE SHEET Assets LIABILITIES $11,417.00 $1,580.00 CASH ACCOUNTS PAYABLE $1,298.00 ACCOUNTS RECEIVABLE ACCRUED LIABILITIES $3,255.00 INVENTORY $1,603.00 $1,460.00 TOTAL CURRENT LIABILITIES $4,553.00 TOTAL CURRENT ASSETS SHAREHOLDER'S EQUITY $10,511.00 FIXED ASSETS $464.00 TOTAL ASSETS $15,064.00 TOTAL LIABILITIES AND EQUITY $15,064.00 2001 INCOME STATEMENT SALES $11,200.00 $1,680.00 $9,520.00 COST OF GOODS SOLD GROSS PROFIT OPERATING EXPENSE $16,530.00 OPERATING PROFIT -$7,010.00 $790.00 -$7,800.00 INTEREST EXPENSE PROFIT BEFORE TAXES TAXES $0.00 NET PROFIT -$7,800.00 A. GENETICS EXPECTS SALES TO DOUBLE IN THE COMING YEAR B. COST OF GOODS SOLD AS A PERCENT OF SALES WILL REMAIN CONTANT, WHICH MEANS THAT THE GROSS PROFIT MARGIN WILL ALSO REMAIN CONSTANT C. OPERATING EXPENSES AND INTEREST WILL REMAIN THE SAME D. PROFITS BEFORE TAXES WILL BE TAXED AT 20% E. ALL PROFITS WILL BE REINVESTED IN THE COMPANY Questions that you need to answer Question 1: Prepare a pro forma income statement. Question 2: Prepare a pro forma balance sheet. Question 3: Does this company need external financing?

FINANCIAL ACCOUNTING
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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Prepare a pro forma balance sheet

**Genetics Company 2017 Financial Overview** **Balance Sheet** **Assets** - Cash: $11,417 - Accounts Receivable: $1,580 - Inventory: $1,603 - *Total Current Assets*: $14,600 - Fixed Assets: $464 - *Total Assets*: $15,064 **Liabilities** - Accounts Payable: $1,298 - Accrued Liabilities: $3,255 - *Total Current Liabilities*: $4,553 - Shareholder’s Equity: $10,511 - *Total Liabilities and Equity*: $15,064 --- **2001 Income Statement** - Sales: $11,200 - Cost of Goods Sold: $1,680 - *Gross Profit*: $9,520 - Operating Expense: $16,530 - *Operating Profit*: -$7,010 - Interest Expense: $790 - *Profit Before Taxes*: -$7,800 - Taxes: $0 - *Net Profit*: -$7,800 --- **Future Projections and Considerations:** A. Genetics expects sales to double in the coming year. B. The cost of goods sold as a percent of sales will remain constant, ensuring the gross profit margin also remains constant. C. Operating expenses and interest will remain the same. D. Profits before taxes will be taxed at 20%. E. All profits will be reinvested in the company. **Questions for Analysis:** 1. Prepare a pro forma income statement. 2. Prepare a pro forma balance sheet. 3. Does this company need external financing? This information is crucial for assessing the company's financial health and planning future strategies. Understanding these elements will support decision-making regarding investment, expansion, and resource management.
Transcribed Image Text:**Genetics Company 2017 Financial Overview** **Balance Sheet** **Assets** - Cash: $11,417 - Accounts Receivable: $1,580 - Inventory: $1,603 - *Total Current Assets*: $14,600 - Fixed Assets: $464 - *Total Assets*: $15,064 **Liabilities** - Accounts Payable: $1,298 - Accrued Liabilities: $3,255 - *Total Current Liabilities*: $4,553 - Shareholder’s Equity: $10,511 - *Total Liabilities and Equity*: $15,064 --- **2001 Income Statement** - Sales: $11,200 - Cost of Goods Sold: $1,680 - *Gross Profit*: $9,520 - Operating Expense: $16,530 - *Operating Profit*: -$7,010 - Interest Expense: $790 - *Profit Before Taxes*: -$7,800 - Taxes: $0 - *Net Profit*: -$7,800 --- **Future Projections and Considerations:** A. Genetics expects sales to double in the coming year. B. The cost of goods sold as a percent of sales will remain constant, ensuring the gross profit margin also remains constant. C. Operating expenses and interest will remain the same. D. Profits before taxes will be taxed at 20%. E. All profits will be reinvested in the company. **Questions for Analysis:** 1. Prepare a pro forma income statement. 2. Prepare a pro forma balance sheet. 3. Does this company need external financing? This information is crucial for assessing the company's financial health and planning future strategies. Understanding these elements will support decision-making regarding investment, expansion, and resource management.
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