Mitchell$$s Industries wishes to prepare a pro$-$forma balance sheet for December $31,2020.$ Use the judgmental approach to prepare a proforma balance sheet dated December $31$st$,2020,$ for Mitchell$$s Industries

The following information is being gathered:

Assumption$($s$)$:

The firm expects $2020$ sales to toal to $$3,550,000$

Marketable Securities are expected to remain unchanged

The desired minimum cash balance $$55,000$

Accounts receivable represents $12\%$ of sales

Inventories represent $14\%$ of sales

A new machine costing $$92,000$ will be acquired during $2020$

Total depreciation for the year will be $$35,000$

Accounts payable represent $15\%$ of sales

Accruals and other current liabilities, long$-$term debt and common stock are expected to remain unchanged

The firm$$s net profit margin is $5\%$

It expects to pay out cash dividends of $$75,000$ during $2020$

The December $31,2019$ balance sheet as follows:

Mitchell Industries Pro Forma Balance Sheet December $31,2019$

Assets

Cash $$45,000$

Marketable Securities $15,000$

Accounts receivable $255,000$

Inventories $340000$

Total current assets $655,00$

Net fixed assets $600,000$

Total Assets $1,255,000$

Liabilities and Stockholder$$s equity

Accounts payable $395,000$

Accruals $60,000$

Other current liabilities $30,000$

Total current liabilities $485,000$

Long$-$term debt $350,000$

Total liabilities $835,000$

Common stock $200,000$

Retained earnings $220,000$

Total liabilities and stockholder$$s equity $1,255,000$

Excel solution method: Create a proforma balance sheet

Mitchell$$s Industries Pro Forma Balance Sheet December $31,2020$

Assets

Current Assets

Cash

Marketable Securities

Accounts receivable

Inventories

Total current assets

Net fixed assets

Total Assets

Liabilities and Stockholder$$s equity

Current Liabilities

Accounts payable

Accruals

Other current liabilities

Total current liabilities

Long$-$term debt

Total liabilities

Common Stock

Retained Earnings

Total Stockholder$$s equity

External funds required

Total liabilities and stockholder$$s equity