10:36 Search X Mayes_8e_CHO2_Problem_Set.docx 4 Dragon Telecommunications Inc. wants to create forecasted financial statements for 2018 based on its accounting data in 2017. In 2017 total revenue was $1,550,000: cost of goods sold was $1,250.000; selling and G&A expenses were $110.000 depreciation expense was $15,000; interest expense was S25,000; the average tax rate was 35%, and the number of shares outstanding was 80.000 Also, in 2017 Dragon had cash of S20.000; accounts receivable of S120.000: inventory of $220,000: plant & equipment of S1,150,000 with an accumulated depreciation of S250,000 Accounts payable, notes payable, long-term debt, common stock, additional paid-in-capital, and retained earnings represented 7%, 0.5%, 20%, 44.5%, 12% and 16% of total assets, respectively. For 2018, Dragon expects a 25% increase in total revenue. while cost of goods sold and selling and G&A expenses are expected to remain at the same proportion of total revenue as in 2017. Both total plant and equipment and depreciation expense will increase by 12%. Similarly, long-term debt is forecasted, and interest expense will increase by 20%, but the tax rate and the number of shares outstanding will remain constant. Additionally, accounts receivable, inventory, accounts payable, and notes payable are expected to increase 15%. while common stock and paid-in-capital will increase by 25% Cash increases by $1.92.327.50 and Retaining Earning increased by $61.977.50. The dividend policy in 2018 will be based on a dividend payout ratio of 50%. In other words, 50% of forecasted earnings will be paid to shareholders as dividends. A Dep in 67 Using these projections, create the forecasted 2018 income statement, balance sheet and statement of cash flows for Dragon Telecommunications Inc. Fach statement should be on a separatie worksheet 10:36 Search X Mayes_8e_CHO2_Problem_Set.docx 4 Dragon Telecommunications Inc. wants to create forecasted financial statements for 2018 based on its accounting data in 2017. In 2017 total revenue was $1,550,000: cost of goods sold was $1,250.000; selling and G&A expenses were $110.000 depreciation expense was $15,000; interest expense was S25,000; the average tax rate was 35%, and the number of shares outstanding was 80.000 Also, in 2017 Dragon had cash of S20.000; accounts receivable of S120.000: inventory of $220,000: plant & equipment of S1,150,000 with an accumulated depreciation of S250,000 Accounts payable, notes payable, long-term debt, common stock, additional paid-in-capital, and retained earnings represented 7%, 0.5%, 20%, 44.5%, 12% and 16% of total assets, respectively. For 2018, Dragon expects a 25% increase in total revenue. while cost of goods sold and selling and G&A expenses are expected to remain at the same proportion of total revenue as in 2017. Both total plant and equipment and depreciation expense will increase by 12%. Similarly, long-term debt is forecasted, and interest expense will increase by 20%, but the tax rate and the number of shares outstanding will remain constant. Additionally, accounts receivable, inventory, accounts payable, and notes payable are expected to increase 15%. while common stock and paid-in-capital will increase by 25% Cash increases by $1.92.327.50 and Retaining Earning increased by $61.977.50. The dividend policy in 2018 will be based on a dividend payout ratio of 50%. In other words, 50% of forecasted earnings will be paid to shareholders as dividends. A Dep in 67 Using these projections, create the forecasted 2018 income statement, balance sheet and statement of cash flows for Dragon Telecommunications Inc. Fach statement should be on a separatie worksheet
