6. After completing the pro forma income statement in Question 5, Mr. Yin now realises he should also complete a pro forma balance sheet. Net sales in 2015 was US$80,000 and his forecasted sales for 2016 is US$100,000.

All of Sugar Cane Farms’ current assets will remain the same percent of sales as they were in 2015. Mr. Yin does not plan to buy or sell any equipment, so his gross property and equipment amount will remain the same as in 2015. In the liabilities and equity section, only accounts payable will remain the same percent of sales as 2015. Except for retained earnings, the other accounts are expected to remain the same as in 2015. The following balances were taken from Sugar Cane Farms’ end of 2015 balance sheet:

(a) Calculate the forecasted end of 2016 values for each of the current asset accounts.

(b) Depreciation expense for 2016 is estimated to be US$1000. Calculate the estimated total assets for the end of 2016.

(c) Forecast the accounts payable for the end of 2016.

(d) What will total liabilities be at the end of 2016?

(e) Assuming the forecasted net income for 2016 is US$18,351, and cash dividends paid equals US$9,000, what total amount will be forecasted for the end of 2016 total liabilities and equity?

(f ) Based on these calculations of the pro forma balance sheet, are additional funds needed?

(g) Net income for 2015 was US$13,859. What was Sugar Cane Farms’ net profit margin for 2015? The forecasted net income for 2016 is US$18,367.
What is Sugar Cane Farms’ forecasted 2016 net profit margin?