fin 310 chapter 5

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Chapter 5 Opea-Ended Assignment Note: Please put your answers only in the section below the Bold Red sentence at the end of the Required section below. ABC Corporation published the following infomation in its finsncial statements for its 2020 annual report: ABC Corporation Income Statement For the Year ended Dec. 31, 2020 Sales Cost of goods sold Gross profit Cash eperating expenses Depreciation Total operating expenses Farnings before interest and taxes Interest expense Earmings before taxes Incons tax expense Ner income 80,000 50,000 \begin{tabular}{|l|l|} \hline 9,000 & 30,000 \\ \hline 3,000 & \\ \hline & 18,00012,000 \\ \hline & 17,280720 \\ & 11,923.25,356.8 \\ \hline \end{tabular} ABC Corperation Balance Sheet Dec. 31, 2020 Cash Shovt-ierm Investmonis Accounts receivable Invesery Fised assets, net Toeal assets Acsounts payable Actrucd liabilitios Ecesds payable Ceermon steck Retained carmings Tocal liabilitics 4 cogaty 9.000 5,000 12.000 10.000 24,000 60,000 8, 000 3,000 12,000 22,000 15,000 60,000 Additional Information 1. Sales in 2021 are estimated to be Si04.000. 2. Cest of goods sold are considered to be variable costs. 3. 55,000 of the cash eperating expenses for 2020 are consiksrod variable costs, and the remainder are fixod costs. 4. Depteciation is, of cwume, considered to be a fived cost. 5. Cash, ascouns rectivable, invemories, actecams payable, and accrued payables are considered to be spontancous items 6. Short-term investments, net fixed assets, bonds payable, and commsen stock are ditcretionary. 7. 55,000 of bends payable at the end of 2020 afe ceesidered "currema liabilitien, "and will be tejaid ee January 1, 2021. The interest rate on the bonds for 2021 will remain the same as it was in 2020 Common stock Retaincd carninges Total liabilitics \& equity 22,000 15,000 60,000 Additional Information 1. Sales in 2021 are eximaled to be 5104,000 . 2. Cost of goods sold are considered to be variable cons. 3. 55,000 of the each epsrating experses for 2020 are considhred variable costs, and the romainder ane fived costs. 4. Depreciation is, of eourse considerid se be a fised cont. 5. Cash, accounts roceivable, inventcries, wcounts payable, and mccrued payables are conudarod to be spontaneous items. 6. Shonterm investments, net fived assess, bonds payable, und conmser wock are discretionary: 7. 55,000 of bonds payable at the end of 2020 are considered "current liabilities," and will be repaid on January 1, 2021. The interes rate en the bonds for 2021 will remain the same as it was in 2020 8. The comptany will purchase fixod assts of $3,600 in 2021 , but overall depeociation fot 2021 will remain the same dollar amount as it was for 2020. 9. The finm paid a dividend of $4,000 in 2020 , and will maintain its 2020 dividend payout nzio fee 2021. 10. The inceene tax rate fie 2021 is erpected to be the same as it was in 2020 Required: A. Prepare the 2021 pro-forma income statemeat for ABC Compration. B. Prepare the 2021 pro-forma balance sheet for ABC Coqporation. Your answers to this open-ended assignment should be placed in the space below this line. A A Sales Cost of goods sold Gross profit Cash operating experses Depreciation Total operating expenses Earnings before interest and taves Interes expense Earnings before tuxes Income tax expense Net income ABC Cerperation Proforma Inceme Statement Fer the Year ended Dec. 31, 2021 B Required: A. Prepare the 2021 pro-forma income statement for ABC Corporation. B. Prepare the 2021 pro-forma balance shect for ABC Corporation. Your answers to this open-ended assignment should be placed in the space below this line