Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

RM The following is the balance sheet of Bestari Inc. as at 31 December, 2021. RM Account Payable 900,000.00 Accrued Expenses 800,000.00 Note Payables 0.00

image text in transcribed

RM The following is the balance sheet of Bestari Inc. as at 31 December, 2021. RM Account Payable 900,000.00 Accrued Expenses 800,000.00 Note Payables 0.00 Long-term debt 1,139,200.00 Current Assets 2,750,000.00 Common Stocks 1,580,600.00 Net Fixed Assets 3,200,000.00 Retained Earnings 1,530,200.00 Total Assets 5,950,000.00 Total Debt and Equity 5,950,000.00 Bestari Inc. is about to embark on an advertising campaign, which is expected to boost its sales from the current level of RM5 million to RM6 million by the end of next year. The firm is currently operating at full capacity and will have to increase its investment in both current and fixed assets to support the projected level of new sales. The firm estimates that both categories of assets will rise in direct proportion to the projected increase in sales. The firm's net profits were 5 percent of the current year's sales but are expected to rise to 8 percent of next year's sales. Dividends are assumed to be 50 percent of net income. Bestari Inc.'s accounts payable and accrued expenses are expected to vary directly with sales. In addition, notes payable will be used to supply the funds needed to finance next year's operations that are not forthcoming from other sources. REQUIRED: Develop a pro-forma balance sheet for the firm based on scenarios given

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The New Retirementality Planning Your Life And Living Your Dreams At Any Age You Want

Authors: Mitch Anthony

4th Edition

1118705122, 978-1118705124

More Books

Students also viewed these Finance questions