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Question 1: Prepare a pro forma income statement.

Question 1: Prepare a pro forma income statement.

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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GENETICS COMPANY 2017 BALANCE SHEET Assets |LIABILITIES CASH $11,417.00 ACCOUNTS PAYABLE $1,298.00 ACCOUNTS RECEIVABLE $1,580.00 ACCRUED LIABILITIES $3,255.00 INVENTORY TOTAL CURRENT ASSETS $1,603.00 TOTAL CURRENT LIABILITIES $4,553.00 $1,460.00 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 $16,530.00 COST OF GOODS SOLD GROSS PROFIT OPERATING EXPENSE OPERATING PROFIT -$7,010.00 INTEREST EXPENSE $790.00 -$7,800.00 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?
Transcribed Image Text:GENETICS COMPANY 2017 BALANCE SHEET Assets |LIABILITIES CASH $11,417.00 ACCOUNTS PAYABLE $1,298.00 ACCOUNTS RECEIVABLE $1,580.00 ACCRUED LIABILITIES $3,255.00 INVENTORY TOTAL CURRENT ASSETS $1,603.00 TOTAL CURRENT LIABILITIES $4,553.00 $1,460.00 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 $16,530.00 COST OF GOODS SOLD GROSS PROFIT OPERATING EXPENSE OPERATING PROFIT -$7,010.00 INTEREST EXPENSE $790.00 -$7,800.00 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?
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