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The most recent financial statements for Crosby, Incorporated, follow. Sales for 2021 are projected to grow by 20 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. Sales Costs Other expenses Earnings before interest and taxes Interest paid CROSBY, INCORPORATED 2020 Income Statement Taxable income Taxes (21%) Net income Dividends Addition to retained earnings Inventory Total Current assets Cash Accounts receivable Assets Total assets Fixed assets Net plant and equipment Pro Forma Income Statement Sales Costs Other expenses EBIT Interest Taxable income Taxes Net income $ 27,475 56,265 $ 20,940 31,970 71,320 $ 124,230 $341,980 $ 686,530 554,420 14,020 $ 466,210 $ 118,090 12,090 CROSBY, INCORPORATED Balance Sheet as of December 31, 2020 $ 106,000 22,260 $ 83,740 Liabilities and Owners' Equity Current liabilities Accounts payable Notes payable Total Long-term debt Owners' equity Common stock and paid-in surplus Retained earnings Total Total liabilities and owners' equity $ 53,790 13,215 $ 67,005 $ 127,500 $ 105,000 In 2020, the firm operated at 80 percent of capacity. Construct the pro forma income statement and balance sheet for the company. Assume that the company cannot sell fixed assets. This implies that asset utilization may remain less than 100 percent next year as well. (Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.) 166,705 $ 271,705 $ 466,210

The most recent financial statements for Crosby, Incorporated, follow. Sales for 2021 are projected to grow by 20 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. Sales Costs Other expenses Earnings before interest and taxes Interest paid CROSBY, INCORPORATED 2020 Income Statement Taxable income Taxes (21%) Net income Dividends Addition to retained earnings Inventory Total Current assets Cash Accounts receivable Assets Total assets Fixed assets Net plant and equipment Pro Forma Income Statement Sales Costs Other expenses EBIT Interest Taxable income Taxes Net income $ 27,475 56,265 $ 20,940 31,970 71,320 $ 124,230 $341,980 $ 686,530 554,420 14,020 $ 466,210 $ 118,090 12,090 CROSBY, INCORPORATED Balance Sheet as of December 31, 2020 $ 106,000 22,260 $ 83,740 Liabilities and Owners' Equity Current liabilities Accounts payable Notes payable Total Long-term debt Owners' equity Common stock and paid-in surplus Retained earnings Total Total liabilities and owners' equity $ 53,790 13,215 $ 67,005 $ 127,500 $ 105,000 In 2020, the firm operated at 80 percent of capacity. Construct the pro forma income statement and balance sheet for the company. Assume that the company cannot sell fixed assets. This implies that asset utilization may remain less than 100 percent next year as well. (Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.) 166,705 $ 271,705 $ 466,210

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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The most recent financial statements for Crosby, Incorporated, follow. Sales for 2021 are projected to grow by 20 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. Sales Costs Other expenses Earnings before interest and taxes Interest paid Taxable income Taxes (21%) Net income Dividends Addition to retained earnings CROSBY, INCORPORATED 2020 Income Statement Inventory Total Current assets Cash Accounts receivable Total assets Fixed assets Net plant and equipment Assets Current assets Cash Pro Forma Income Statement Sales Costs Other expenses EBIT Interest Taxable income Taxes Net income Accounts receivable Inventory Total assets Total current assets Fixed assets Net plant and equipment EFN $ 27,475 56,265 Assets $ 20,940 31,970 71,320 CROSBY, INCORPORATED Balance Sheet as of December 31, 2020 $ 124,230 $ 341,980 $ 686,530 554,420 14,020 $ 466,210 $ 118,090 12,090 $ 106,000 22,260 $83,740 In 2020, the firm operated at 80 percent of capacity. Construct the pro forma income statement and balance sheet for the company. Assume that the company cannot sell fixed assets. This implies that asset utilization may remain less than 100 percent next year as well. (Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.) Liabilities and Owners' Equity Current liabilities Accounts payable Notes payable. Total Long-term debt Owners' equity Common stock and paid-in surplus Retained earnings Total Total liabilities and owners' equity Pro Forma Balance Sheet Current liabilities Accounts payable Notes payable Total current liabilities Long-term debt Owners' equity $ 53,790 13,215 $ 67,005 $ 127,500 Common stock and paid-in surplus Retained earnings Total owner's equity Total liabilities and owners' equity What is the EFN? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) $ 105,000 Liabilities and Owners' Equity 166,705 $ 271,705 $ 466,210
Transcribed Image Text:The most recent financial statements for Crosby, Incorporated, follow. Sales for 2021 are projected to grow by 20 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. Sales Costs Other expenses Earnings before interest and taxes Interest paid Taxable income Taxes (21%) Net income Dividends Addition to retained earnings CROSBY, INCORPORATED 2020 Income Statement Inventory Total Current assets Cash Accounts receivable Total assets Fixed assets Net plant and equipment Assets Current assets Cash Pro Forma Income Statement Sales Costs Other expenses EBIT Interest Taxable income Taxes Net income Accounts receivable Inventory Total assets Total current assets Fixed assets Net plant and equipment EFN $ 27,475 56,265 Assets $ 20,940 31,970 71,320 CROSBY, INCORPORATED Balance Sheet as of December 31, 2020 $ 124,230 $ 341,980 $ 686,530 554,420 14,020 $ 466,210 $ 118,090 12,090 $ 106,000 22,260 $83,740 In 2020, the firm operated at 80 percent of capacity. Construct the pro forma income statement and balance sheet for the company. Assume that the company cannot sell fixed assets. This implies that asset utilization may remain less than 100 percent next year as well. (Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.) Liabilities and Owners' Equity Current liabilities Accounts payable Notes payable. Total Long-term debt Owners' equity Common stock and paid-in surplus Retained earnings Total Total liabilities and owners' equity Pro Forma Balance Sheet Current liabilities Accounts payable Notes payable Total current liabilities Long-term debt Owners' equity $ 53,790 13,215 $ 67,005 $ 127,500 Common stock and paid-in surplus Retained earnings Total owner's equity Total liabilities and owners' equity What is the EFN? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) $ 105,000 Liabilities and Owners' Equity 166,705 $ 271,705 $ 466,210
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