Financial Statement Forecasting

Pro Forma Income Statement and Balance Sheet Below is the income statement and balance sheet for Blue Bill Corporation for 2013. Based on the historical statements and the additional information provided, construct the firm's pro forma income statement and balance sheet for 2014. Blue Bill Corporation Income Statement For the year ended 2013 Revenue Cost of goods sold Gross margin SG&A expense Depreciation expense Earnings Before Interest and Taxes (EBIT) Interest expense Taxable income Income Tax Expense Net income Dividends To retained earnings 2012 $60,000 42,000 18,000 6,000 1,800 10,200 1,500 8,700 3,045 5,655 750 $4,905 2013 $63,000 44,100 18,900 6,300 2,000 10,600 1,800 8,800 3,080 5,720 800 $4,920 Projected 2014 Additional income statement information: Sales will increase by 5% in 2014 from 2013 levels. COGS and SG&A will be the average percent of sales for the last 2 years. Depreciation expense will increase to $2,200. Interest expense will be $1,900. The tax rate is 35%. Dividend payout will increase to $850. Blue Bill Corporation Balance Sheet December 31, 2013 Current assets Cash Accounts receivable Inventory Total current assets Property, plant, and equipment (PP&E) Accumulated depreciation Net PP&E Total assets Current liabilites Accounts payable Bank loan (10%) Other current liabilities Total current liabilities Longterm debt (12%) Common stock Retained earnings Total liabilities and equity 2013 Projected 2014 $8,000 3,150 9,450 20,600 28,500 16,400 12,100 $32,700 $3,780 3,200 1,250 8,230 4,800 1,250 18,420 $32,700 Additional balance sheet information: The minimum cash balance is 12% of sales. Working capital accounts (accounts receivable, accounts payable, and inventory) will be the same percent of sales in 2014 as they were in 20 $8,350 of new PP&E will be purchased in 2014. Other current liabilities will be 3% of sales in 2014. There will be no changes in the common stock or longterm debt accounts. The plug figure (the last number entered that makes the balance sheet balance) is bank loan