Assignment # $53$

Prepare a pro forma income statement for the year ended May $31,2019$

Prepare a pro forma statement of retained earnings for the year ended May $31,2019$

Prepare a pro forma balance sheet as at May $31,2019$

The forecast sales for the year are $$1,600,000$ and the gross profit is expected to be $30\%$ of sales. Eighty percent al all sales are on credit. At

present the average collection period is six weeks but it is likely that this will change to eight weeks in the forthcoming year

At the year$-$end, inventory is expected to be $40\%$ higher than the beginning of the year.

During the year the company intends to pay $$45,000$ for a fleet of delivery vans.

Administration expenses for the year are expected to be $$300,000($including $$12,000$ for amortization of buildings and $$38,000$ for

amortization of furniture and fixtures$).$ Selling expenses are expected to be $$95,000($including $$10,000$ for amortization of delivery vans$).$

All purchases are on credit. It has been estimated that the average payment period taken will be $12$ weeks during the forthcoming year.

Income taxes for the year are expected to be $34,000.$ Half of this will be paid during the year and the remaining half will be outstanding at

year$-$end.

Dividends declared and paid for the year are expected to be $$0\mathrm{.}06$ per share.

There are $500,000$ shares out standing

Choice Designs Limited

Balance Sheet

As at May $31,2018$

$($in $ thousands$)$

Current assets