LG 5 P4-18 Pro forma balance sheet Randy & Wiskers Enterprises reported sales of $15.5 mil- lion for the 2015 financial year. In order to identify the financial needs for the 2016 financial year, you were requested to compile a pro forma balance sheet. The balance sheet as of December 31, 2015 (shown on the next page) and other additional infor- mation are as follows. Additional information (1) The balance sheet items vary directly with sales: Accounts receivable (15%), In- ventory (15%), Accounts payable (10%), and net profit margin (2%). (2) All other balance sheet items remain unchanged. (3) Minimum cash balance of $520,000 is desired. (4) New equipment costing $20,000 will be purchased during 2016, and the net fixed assets will increase to $5,815,000. (5) Accruals will increase to $660,000. (6) Long-term debt is not expected to be repaid in full, and no common stock will be repurchased. (7) The dividend payout will remain unchanged at 50% of net profits. (8) Sales are expected to decrease to $15,000,000. Randy & Wiskers Enterprises Balance Sheet December 31, 2015 (5000) Assets Liabilities and stockholders' equity Cash Accounts payable Accruals Other current liabilities $ 500 350 1,500 2,300 Total current assets $4,650 5,800 $10,450 Marketable securities Accounts receivable Inventories Net fixed assets Total assets Total current liabilities Long-term debt Total liabilities Common equity $1,870 600 150 $2,620 2,000 4,620 5,830 Total liabilities and stockholders' equity $10,450 Based on the information provided, answer the following: a. Prepare a pro forma balance sheet as at December 31, 2016. b. Identify and describe the needs as indicated by the pro forma balance sheet in part a.
LG 5 P4-18 Pro forma balance sheet Randy & Wiskers Enterprises reported sales of $15.5 mil- lion for the 2015 financial year. In order to identify the financial needs for the 2016 financial year, you were requested to compile a pro forma balance sheet. The balance sheet as of December 31, 2015 (shown on the next page) and other additional infor- mation are as follows. Additional information (1) The balance sheet items vary directly with sales: Accounts receivable (15%), In- ventory (15%), Accounts payable (10%), and net profit margin (2%). (2) All other balance sheet items remain unchanged. (3) Minimum cash balance of $520,000 is desired. (4) New equipment costing $20,000 will be purchased during 2016, and the net fixed assets will increase to $5,815,000. (5) Accruals will increase to $660,000. (6) Long-term debt is not expected to be repaid in full, and no common stock will be repurchased. (7) The dividend payout will remain unchanged at 50% of net profits. (8) Sales are expected to decrease to $15,000,000. Randy & Wiskers Enterprises Balance Sheet December 31, 2015 (5000) Assets Liabilities and stockholders' equity Cash Accounts payable Accruals Other current liabilities $ 500 350 1,500 2,300 Total current assets $4,650 5,800 $10,450 Marketable securities Accounts receivable Inventories Net fixed assets Total assets Total current liabilities Long-term debt Total liabilities Common equity $1,870 600 150 $2,620 2,000 4,620 5,830 Total liabilities and stockholders' equity $10,450 Based on the information provided, answer the following: a. Prepare a pro forma balance sheet as at December 31, 2016. b. Identify and describe the needs as indicated by the pro forma balance sheet in part a.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:LG 5 P4-18 Pro forma balance sheet Randy & Wiskers Enterprises reported sales of $15.5 mil-
lion for the 2015 financial year. In order to identify the financial needs for the 2016
financial year, you were requested to compile a pro forma balance sheet. The balance
sheet as of December 31, 2015 (shown on the next page) and other additional infor-
mation are as follows.
Additional information
(1) The balance sheet items vary directly with sales: Accounts receivable (15%), In-
ventory (15%), Accounts payable (10%), and net profit margin (2%).
(2) All other balance sheet items remain unchanged.
(3) Minimum cash balance of $520,000 is desired.
(4) New equipment costing $20,000 will be purchased during 2016, and the net
fixed assets will increase to $5,815,000.
(5) Accruals will increase to $660,000.
(6) Long-term debt is not expected to be repaid in full, and no common stock will
be repurchased.
(7) The dividend payout will remain unchanged at 50% of net profits.
(8) Sales are expected to decrease to $15,000,000.
Randy & Wiskers Enterprises Balance Sheet December 31, 2015 (5000)
Liabilities and stockholders' equity
Accounts payable
$1,870
Accruals
600
Other current liabilities
150
$2,620
2,000
4,620
5,830
Assets
Cash
Marketable securities
Accounts receivable
Inventories
$ 500
350
1,500
2,300
Total current assets $4,650
5,800
$10,450
Net fixed assets
Total assets
Total current liabilities
Long-term debt
Total liabilities
Common equity
Total liabilities and
stockholders' equity $10,450
Based on the information provided, answer the following:
a. Prepare a pro forma balance sheet as at December 31, 2016.
b. Identify and describe the needs as indicated by the pro forma balance sheet in part a.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education