Ma & Pa Kettle's Chili Company has begun selling a new chili recipe and they want you to help them with next year's budgeted financial statements.Using the worksheet below, complete Ma & Pa's forecast and answer the questions which follow.

Assumptions:

To begin with, Ma & Pa are sure sales will grow 50% next year.Assume that is true.Then assume that COGS, Current Assets, and Current Liabilities all vary directly with Sales (that means if sales grows a certain percentage, then the account in question will grow by that same percentage).Assume that fixed expenses will remain unchanged and that $1,000 worth of new Fixed Assets will be obtained next year.Lastly, the current dividend policy will be continued next year.

Ma & Pa Kettle Chili Company, Inc.

Financial Forecast

Estimated

This yearfor next year

Sales $20,000________

COGS5,000________

Gross Profit15,000________

Fixed Expenses3,000________

BeforeTax Profit12,000________

Tax @ 33.3333%4,000 ________

Net Profit $8,000________

Dividends$0________

Current Assets$25,000________

Net Fixed Assets15,000________

Total Assets$40,000________

Current Liabilities$17,000________

Longterm debt3,000________

Common Stock7,000________

Retained Earnings13,000 ________

Total Liabs & Eq$40,000 ________

Amount need to balance the balance sheet________

(Projected total assets minus projected

total liabilities & equity *)