Question
Swayers Corporation recently reported the the following 2019 balance sheet and 2019 income statement For the coming year, the company's CFO has assembled this information:
Swayers Corporation recently reported the the following 2019 balance sheet and 2019 income statement
For the coming year, the company's CFO has assembled this information:
- The company is forecasting a 25% increase in sales
- It expects that its cost of goods sold, operating expenses, assets and current liabilities will increase at the same rate as sales
- Interest expense, long term debt and capital stock are expected to remain constant.
-Tax rate is expected to remain at 30%.
- No dividends will be declared.
1. Prepare the statement of cash flows for the year 2020 using the percent of sales method (estimation method)
SWAYERS CORPORATION | |
BALANCE SHEET | |
DECEMBER 31, 2019 | |
ASSETS | |
CURRENT ASSETS | |
CASH | 114,690 |
ACCOUNTS RECEIVABLE | 1,000 |
INVENTORY | 1,000 |
TOTAL CURRENT ASSETS | 116,690 |
FIXED ASSETS | |
NET FIXED ASSETS | 40,000 |
TOTAL ASSETS | 156,690 |
LIABILITIES | |
CURRENT LIABILITIES | |
ACCOUNTS PAYABLE | 2,000 |
NOTES PAYABLE | |
TOTAL CURRENT LIABILITIES | 2,000 |
LONG TERM DEBT | 13,000 |
TOTAL LIABILITIES | 15,000 |
STOCKHOLDERS' EQUITY | |
CAPITAL STOCK | 60,000 |
RETAINED EARNINGS, BEGINNING | 32,130 |
ADD: NET INCOME (LOSS) | 49,560 |
LESS: DIVIDENDS | - |
RETAINED EARNINGS, END | 81,690 |
TOTAL STOCKHOLDERS EQUITY | 141,690 |
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY | 156,690 |
SWAYERS CORPORATION | |
INCOME STATEMENT | |
FOR THE YEAR ENDED | DECEMBER 31, 2019 |
SALES (NET) | 200,000 |
COST OF GOODS SOLD | 100,000 |
GROSS PROFIT | 100,000 |
LESS: OPERATING EXPENSES | |
SALARIES | 12,000 |
GASOLINE/TRAVEL | 2,000 |
UTILITIES | 4,000 |
DEPRECIATION | 10,000 |
TOTAL OPERATING EXPENSES | 28,000 |
INCOME (LOSS) FROM OPERATIONS | 72,000 |
LESS: INTEREST | 1,200 |
INCOME BEFORE TAXES | 70,800 |
LESS: TAXES (30%) | 21,240 |
NET INCOME AFTER TAXES | 49,560 |
SWAYERS CORPORATION | |
PROJECTED INCOME STATEMENT | |
FOR THE YEAR ENDED | DECEMBER 31, 2020 |
SALES (NET) | 250,000 |
COST OF GOODS SOLD | 125,000 |
GROSS PROFIT | 125,000 |
LESS: OPERATING EXPENSES | |
SALARIES | 15,000 |
GASOLINE/TRAVEL | 2,500 |
UTILITIES | 5,000 |
DEPRECIATION | 12,500 |
TOTAL OPERATING EXPENSES | 35,000 |
INCOME (LOSS) FROM OPERATIONS | 90,000 |
LESS: INTEREST | 1,200 |
INCOME BEFORE TAXES | 88,800 |
LESS: TAXES (30%) | 26,640 |
NET INCOME AFTER TAXES | 62,160 |
SWAYERS CORPORATION | |
PROJECTED BALANCE SHEET | |
DECEMBER 31, 2020 | |
ASSETS | |
CURRENT ASSETS | |
CASH | 143,362.50 |
MARKETABLE SECURITIES | 23,487.50 |
ACCOUNTS RECEIVABLE | 1,250 |
INVENTORY | 1,250 |
TOTAL CURRENT ASSETS | 169,350 |
FIXED ASSETS | |
NET FIXED ASSETS | 50,000 |
TOTAL ASSETS | 219,350 |
LIABILITIES | |
CURRENT LIABILITIES | |
ACCOUNTS PAYABLE | 2,500 |
NOTES PAYABLE | - |
TOTAL CURRENT LIABILITIES | 2,500 |
LONG TERM DEBT | 13,000 |
TOTAL LIABILITIES | 15,500 |
STOCKHOLDERS' EQUITY | |
CAPITAL STOCK | 60,000 |
RETAINED EARNINGS, BEGINNING | 81,690 |
ADD: NET INCOME (LOSS) | 62,160 |
LESS: DIVIDENDS | - |
RETAINED EARNINGS, END | 143,850 |
TOTAL STOCKHOLDERS EQUITY | 203,850 |
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY | 219,350 |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started