20. Jones and Company has begun selling a new pie recipe and they want you to help them with next year's budgeted financial statements. Using the worksheet below, complete Jones and Company forecast and answer the questions which follow. Assumptions: To begin with, Jones and Company is sure sales will grow 50% next year. Assume that is true. Then assume that COGS, Current Assets, and Current Liabilities all vary directly with Sales (that means if sales grows a certain percentage, then the account in question will grow by that same percentage). Assume that fixed expenses will remain unchanged and that $3,000 worth of new Fixed Assets will be obtained next year. Long term debt and common stock accounts remain unchanged. Lastly, the current dividend policy will be continued next year. Jones and Company Financial Forecast Estimated This year for next year Sales $85,000 _______ COGS 35,000 _______ Gross Profit 40,000 _______ Fixed Expenses 3,000 _______ Before-Tax Profit 37,000 _______ Tax @ 33.3333% 12,332 _______ Net Profit 24,668 _______ Dividends $0 _______

Current Assets $40,000 ________ Net Fixed Assets 20,000 ________ Total Assets $50,000 ________ Current Liabilities $18,000 ________ Long-term debt 3,000 ________ Common Stock 9,000 ________ Retained Earnings 13,000 ________ Total Liabs & Eq $43,000 ________ Amount need to balance the balance sheet ________ (Projected total assets minus projected total liabilities & equity *) * If this number is positive it means Jones and Company need additional external funding to finance their projected asset growth. If this number is negative it means Jones and Company has programmed too much financing for the amount of assets they project