3. [8 points] Please complete the Pro forma Income Statement and Balance Sheet on the next several pages based on the 2018 financial statements and the projections for 2019. Use the percent of sales approach for projections. Round to the nearest whole number (no decimals). Projections for 2019: 1. Projected sales are $6,200 2. The tax rate will change to 25% 3. The firm will pay cash dividends amounting to 40% of net profits after taxes 4. The company has excess capacity so no new fixed assets will need to be purchased 5. Notes Payables will remain constant 6. $100 of new long-term debt will be issued (borrowed) in 2019. 7. Interest is 20 % of LT Debt and interest expense will increase due to the increase in LT Debt (see number 6 above). NAUFIN Income Statement For the Year Ended December 31, 2018 (in thousands) Sales Revenue $5,000 D Focus 7. Interest is 20% of LT Debt and interest expense will increase due to the increase in LT Debt (see number 6 above). NAUFIN Income Statement For the Year Ended December 31, 2018 (in thousands) les Revenue $5,000 Less: Cost of Goods Sold -2,750 Gross Profit 2,250 Less: Operating Expenses -850 Operating Profit (EBIT) 1,400 Less: Interest Expense (20 % of LT Debt) -180 Net profits before taxes 1,220 Less: Taxes (rate 40 %) -488 Net Profit after taxes 732 Less: Cash Dividends -293 To Retained Earnings 439 NAUFIN Pro Forma Income Statement For the Year Ended December 31, 2019 (in thousands) Assumptions/Calculations 2019 Forecast Sales Revenue $6,200 Less: Cost of Goods Sold Gross Profit Less: Operating Expenses Operating Profit (EBIT) Less: Interest Expense Net profits before taxes Less: Taxes (rate 40 % ) Net Income Less: Cash Dividends To Retained Earnings Balance Sheet As of December 31, 2018 (in thousands) Assets Liabilities & Owner's Equity Current Assets: Current Liabilities: $300 Accounts Payable 600 Notes Payable Cash $500 Accounts Receivable 200 Total Current 800 Liabilities Inventory 700 Total Current 1,700 Long-term Debt Assets 900 Total Liabilities 1,600 Net Property, Plant & Equip 2,000 Owner's Equity: Common stock, at par 700 Additional Paid-in Capital, common 500 Retained Earnings 900 Total Owner's Equity 2,100 Total Liabilities & $3,700 Owner's Equity $3,700 Total Assets Additional (external) funds needed, or excess funds $0.00 NAUFIN Pro Forma Balance Sheet As of December 31, 2019 (in thousands) 2019 Forecast Assumptions/Calculations Assets Current Assets: Cash Accounts Receivable Inventory Total Current Assets Net Property, Plant & Equipment Total Assets Liabilities & Owner's Equity Current Liabilities: Accounts Payable Notes Payable Total Current Liabilities Long-term Liabilities Total Liabilities Owner's Equity: Common Stock, par value Long-term Liabilities Total Liabilities Owner's Equity: Common Stock, par value Additional Paid-in Capital Retained Earnings Total Owner's Equity Total Liabilities & Owner's Equity Additional (external) funds needed, Calculate the AFN above using the balance sheet, not the long AFN formula. or excess funds (circle one)$
