Leonard Industries Projected Balance Sheet As of Dec. 31,2020 Assets Liabilities and Equity Current Assets Current Liabilities Trade payables Cash Accruals Marketable securities Other current liabilities Receivables Total Inventories Non-current Liabilities Long-term debt, net of current Total Current Assets portion Note payable (External Fund neededj Total liabilities Non-curren! Assets Stockholders equity Property, plant, and Capital stock equipment, net Other noncurrent assets Retained earnings Total non-current assets Total stockholders' equity Total liabilities and stockholders' Total assets equityPROJECTED FINANCIAL STATEMENT PREPARATION Historical information: Leonard Industries Leonard Industries ncome Statement Balance Sheet For the year ended Dec. 31,2019 As of Dec. 31,2019 Net Sales 2,500,000 Assets Liabilities and Equity Cost of sales 2,000,000 Gross Profit 500,000 Current Assets Current Liabilities Trade payables 395,000 Operating 82,000 Cash 45,000 Accruals 60,000 expenses Marketable securities 15,000 Other current liabilities 30,000 Operating income 418,000 Receivables 255,000 Total 485,000 Interest Expense 25,000 Inventoric Income before 340,000 Non-current Liabilities 393,000 taxes Total Current Assets 655,000 Long-term debt, net of 350,000 Taxes 117,900 current portion Total liabilities 835,000 Net Income 275,100 Non-current Assets Stockholders equity Property, plant, and 600,000 Capital stock 600,000 equipment, net Other noncurrent 400,000 Retained earnings 220,000 assets Total non-current 1,000,00 Total stockholders' 820,000 assets equity Total assets 1,655,00 Total liabilities and 1.655.000 Leonard Industries wishes to prepare a pro forma income statement and balance sheet for December 31, 2020. The following information has been gathered. (1) Sales are expected to increase by 20% in 2020 from the 2019 sales level. This growth assumption is based on the assessment of the external and internal factors related to the Company and the historical growth of the company. (2) The Company wants to maintain the same gross profit percentage per year as 2019. (3) Operating expenses is composed of variable and fixed operating expenses. It will be projected as follows: a) variable operating expense is 2% of the projected sales; b) fixed operating expense attributable to depreciation expense is equal to P32,000. (4) Interest expense will decrease by P2,000. 5) Income tax rate is constant. (6) No dividend payments were made to stockholders.B. Use the judgmental approach to prepare a pro forma balance sheet dated December 31, 2020, for Leonard Industries. C. Use EFN (External Fund Needed) as a balancing figure. D. Provide the necessary computations for each account. Use the worksheet below to answer the task: WORKSHEET - LEONARD INDUSTRIES FINANCIAL PROJECTION Leonard Industries Projected Income Statement For the year ended Dec. 31,2020 Net Sales Less: Cost of sales Gross Profit Less: Operating expenses Operating income Less: Interest Expense Income before taxes Less: Taxes Net Income(7) A minimum cash balance of P100,000 is desired. (8) Marketable securities are expected to remain unchanged. (9) Accounts receivable represent 10% of sales. (10) Inventories represent 12% of sales. (11) A new machine costing P90,000 will be acquired during 2020. Total depreciation for the year will be P32,000. Other non-current assets will increase by P50,000. (12) Trade payables represent 14% of sales. (13) P300,000 of the long-term debt will be paid (14) Accruals, other current liabilities and common stock are expected to remain unchanged. (15) Retained earnings will increase by an amount equivalent to the computed net income from the 2020 year-end projected income statement. Required: A. Prepare the pro-forma or projected income statement based on the given information above
