INSTRUCTIONS: Using the 2018 trial balance and additional information below, prepare the projected (2019) financial statements for Walnut Grove. The prior year data (provided) is the starting point for your projections, and then each of the assumptions listed below will also be used. Prepare an Excel workbook which contains the following information: Tab 1: 2018 Trial Balance (provided in the template) Tab 2: 2019 Projected Income Statement Tab 3: 2019 Projected Balance Sheet Tab 4: 2019 Projected Statement of Cash Flows Assumptions: 1. Sales will change as follows: a. Material & Supplies Sales will increase 5% b. Small Tool Sales will increase 5% c. Tool Rental Revenue will continue throughout the 2018 year. An average of 16 tools will be rented each week, at an average of $55 per tool for 52 weeks. 2. Vendor compensation will increase consistently with Material & Supplies Sales and Small Tools Sales. 3. Cost of sales for materials and supplies and small tools will increase proportionately based on their current percentage of sales, respectively. (HINT: You will need to use vertical analysis.) 4. Small tools expenses, including blades and other items, are expected to total $7,800 in 2019. 5. Office supplies and postage are expected to increase by 60% during 2019. 6. On January 1st, the company will invest $119,500 in new equipment for its custom cabinet division. This equipment will have a 5-year life and should be depreciated using the straight-line method. This purchase represents the only expected change to property, plant, and equipment. The company will finance the equipment purchase with a 5 year note at 3.60% interest. You will need to use an amortization schedule to find the principle and interest payment amounts. The loan is paid monthly. 7. In relation to #6 above, the custom cabinet sales division begins operations in 2019. The following assumptions must be used to project the impact on the financial statements. (Hint: You may need to add accounts to the trial balance.) a. Walnut Grove anticipates that it will sell 180 cabinets at an average selling price of $2,050 each during 2019. b. Direct materials per cabinet are $700 per unit. c. The direct labor per cabinet is 3.75 hours, and Walnut Grove pays $27.50/hour for this labor. d. Factory overhead is calculated at 55% of direct labor. 8. The building is being depreciated over a 39-year life, the computers and software are being depreciated over a 3-year life, and the furniture and fixtures are being depreciated over a 5-year life, all using straight-line depreciation. 9. Because of the new cabinet division, insurance costs will increase to $26,000 per year effective January 1. The company prepaid 2 years of this insurance and received a 3.30% discount for the 2-year prepayment. 10. On March 1, a new cabinet division manager will be hired at a cost of $49,500. In additional to the new cabinet division manager, 3 new employees will be hired at an average wage of $21.25 per hour, employees work an average of 40 hours per week. Payroll taxes should be calculated at 18% of wages. 11. With 18 weeks remaining in the year, 2 additional employees will be hired at a rate of $17.00 per hour, based on an average of 35 hours per week. 12. The income tax rate is 21%. 13. At the end of the year, Walnut Grove will have $32,000 in ending inventory. 14. Purchases are made evenly throughout the year and are paid in full in the month following purchase. 15. Sales are collected in full the month following the sale. During the month of December, invoiced sales totaled $137,250. 16. The sales tax rate is 6.30%. 17. At the end of the year, Walnut Grove has received full payment for 20 custom cabinet orders that will be completed in January 2020.

TRIAL BALANCE For the Year Ended December 31, 2018 Credit Debit Credit Debit 224,271 23,101 32.160 1,600 251,000 2,900 6,860 58,000 Cash accounts Receivable 8 Inventory Prepaid Expenses 10 Building 11-Computers & Software 12 Furniture & Fixtures 1 s Land 14 Machinery & Equipment 15 Accumulated Depreciation 16 Accounts Payable 17 Payroll Tax Payable 18 Sales Tax Payable 19 Unearned Revenue 20 Line of Credit 8,775 13,234 2,050 1,599 280,000 21 Notes Payable 22 Feters, J, Capital es Peters, M., Capital 24 Retained Earnings es Material & Supplies Sales 26 Small Tool Sales 27 Tool Rental Revenue 1,250 1,250 146,390 282,714 34,932 12,648 28 Mendor Compensation Revenue 23 COGS:Material & Supplies 30 COGS: Small Tools 31 COGS: Wages 32 Depreciation Expense 33 Insurance Expense 34 Office Supplies Expense 5 Payroll Tax Expense 36 Postage Expense 629 21,309 33,060 8,775 6,300 5,951 340 Small Tool Expense 38 Interest Expense 35 ,041 785,471 85471 Walnut Grove Proj Income Statement TRIAL BALANCE For the Year Ended December 31, 2018 Credit Debit Credit Debit 224,271 23,101 32.160 1,600 251,000 2,900 6,860 58,000 Cash accounts Receivable 8 Inventory Prepaid Expenses 10 Building 11-Computers & Software 12 Furniture & Fixtures 1 s Land 14 Machinery & Equipment 15 Accumulated Depreciation 16 Accounts Payable 17 Payroll Tax Payable 18 Sales Tax Payable 19 Unearned Revenue 20 Line of Credit 8,775 13,234 2,050 1,599 280,000 21 Notes Payable 22 Feters, J, Capital es Peters, M., Capital 24 Retained Earnings es Material & Supplies Sales 26 Small Tool Sales 27 Tool Rental Revenue 1,250 1,250 146,390 282,714 34,932 12,648 28 Mendor Compensation Revenue 23 COGS:Material & Supplies 30 COGS: Small Tools 31 COGS: Wages 32 Depreciation Expense 33 Insurance Expense 34 Office Supplies Expense 5 Payroll Tax Expense 36 Postage Expense 629 21,309 33,060 8,775 6,300 5,951 340 Small Tool Expense 38 Interest Expense 35 ,041 785,471 85471 Walnut Grove Proj Income Statement