Document8 Home Insert Draw Design Layout References Mailings Review View Share Comments Paste Styles StylesSensitivity Fill and Send for Agreement Pane Signature Status Integrative-Pro forma statements Provincial Imports, Inc., has assembled past (2019) financial statements (income statement and balance sheet) and financial projections for use in preparing financial plans for the coming year (2020). Information related to financial projections for the year 2020 is as follows (1) Projected sales are $6,000,000 (2) Cost of goods sold in 2019 includes $1,000,000 in fixed costs. (3) Operating expense in 2019 includes $250,000 in fixed costs. (4) Interest expense will remain unchanged (5) The firm will pay cash dividends amounting to 40% of net profits after taxes (6) Cash and inventories will double (7) Marketable securities, notes payable, long-term debt, and common stock will remain unchanged (8) Accounts receivable, accounts payable, and other current liabilities will change in direct response to the change in sales. (9) A new computer system costing $356,000 will be purchased during the year. Total depreciation expense for the year will be $110,000 (10) The tax rate will remain at 21% a. Prepare a pro forma income statement for the year ended December 31, 2020, using the fixed cost data given to improve the accuracy of the percent-of-sales method b. Prepare a pro forma balance sheet as of December 31, 2020, using the information given and the judgmental approach. Include a reconciliation of the retained earnings account. c. Analyze these statements, and discuss the resulting external financing required Provincial Imports, Inc. Income Statement for the Year Ended December 31, 2019 Sales revenue Less: Cost of goods sold Gross profits Less: Operating expenses Operating profits Less: Interest expense Net profits before taxes Less: Taxes (rate 21%) Net profits after taxes Less: Cash dividends $5,000,000 2,750,000 $2,250,000 850,000 $1,400,000 200,000 $1,200,000 252,000 $948,000 379,200 Page 1 of 1 0 wordsEnglish (United States) Focus E) 1-0 + 306% Document8 Home Insert Draw Design Layout References Mailings Review View Share Comments Paste Styles StylesSensitivity Fill and Send for Agreement Pane Sign Signature Status method b. Prepare a pro forma balance sheet as of December 31, 2020, using the information given and the judgmental approach. Include a reconciliation of the retained earnings account. c. Analyze these statements, and discuss the resulting external financing required. Provincial Imports, Inc. Income Statement for the Year Ended December 31, 2019 Sales revenue Less: Cost of goods sold Gross profits Less: Operating expenses Operating profits Less: Interest expense Net profits before taxes Less: Taxes (rate#21%) Net profits after taxes Less: Cash dividends To retained earnings $5,000,000 2,750,000 $2,250,000 850,000 $1,400,000 200,000 $1,200,000 252,000 $948,000 379,200 $568,800 Provincial Imports, Inc. Balance Sheet December 31, 2019 Assets Liabilities and Stockholders' Equity Cash $200,000 Accounts payable 5700,000 95,000 200,000 5,000 $1,000,000 500,000 75.000 1,375,000 $2,950,000 225,000 625,000 500,000 $1,550,000 Taxes payable Notes payable Other current liabilities Total current liabilities Total current assets Net fixed assets 1,400,000 Long-term debt Common stock Retained earnings Total liabilities and equity Total assets $2,950,000 Page 1 of 1 0 wordsEnglish (United States) Focus E) 1-0 + 306%
