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Red Queen Restaurants wishes to prepare financial plans. Use the financial statements and the other information provided here LOADING... to prepare the financial plans. The
Red Queen Restaurants wishes to prepare financial plans. Use the financial statements and the other information provided here LOADING... to prepare the financial plans. The following financial data are also available for next year:
The firm has estimated that its sales will be $
The firm expects to pay $ in cash dividends.
The firm wishes to maintain a minimum cash balance of $
Accounts receivable represent approximately of annual sales.
The firm's ending inventory will change directly with changes in sales.
Red Queen will purchase new machine costing $ and have total depreciation of $
Accounts payable will change directly in response to changes in sales.
Taxes payable will equal onefourth of the tax liability on the pro forma income statement.
Marketable securities other current liabilities, longterm debt, and common stock will remain unchanged.
a Prepare a pro forma income statement for next year, using the percentofsales method.
b Prepare a pro forma balance sheet for next year, using the judgmental approach.
c Analyze these statements, and discuss the resulting external financing required. here is additonal details from Red Queen Restaurants Income Statement
for the Year Ended December
Sales revenue $
Less: Cost of goods sold
Gross profits $
Less: Operating expenses
Net profits before taxes $
Less: Taxes
Net profits after taxes $
Less: Cash dividends
To retained earnings $ and Red Queen Restaurants Income Statement
for the Year Ended December
Sales revenue $
Less: Cost of goods sold
Gross profits $
Less: Operating expenses
Net profits before taxes $
Less: Taxes
Net profits after taxes $
Less: Cash dividends
To retained earnings $ and Assets Liabilities and Stockholders' Equity
Cash $ Accounts payable $
Marketable securities Taxes payable
Accounts receivable Other current liabilities
Inventories Total current liabilities $
Total current assets $ Longterm debt $
Net fixed assets Common stock $
Retained earnings $
Total assets $ Total liabilities and equity $
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