The following data has been supplied to you by the owner of Parsons Limited, a retail firm. Using your knowledge of ratios and forecasting, prepare the following:

A projected income statement for calendar year 2018

A projected balance sheet at December 31, 2018

Another set of the above projections, assuming the following:

Sales will be $1,000,000, rather than $750,000

Other operating expenses will be only 7% of sales

Dividends will only be paid out at 20% of net income after tax

Data provided as follows:

Sales projection $750,000

Gross profit 20% of sales

Inventory at December 31, 2017 was $150,000

2018 age of ending inventory is 90 days, based on cost of goods sold

Other operating expenses 8% of sales

Income tax 25% of net income before tax

Accounts payable holding period is 40 days purchases

Accounts receivable holding period is 10 days sales

Income tax payable 30% of current year tax expense

Land at cost $30,000

Buildings and fixtures at cost $90,000

Accumulated depreciation building and fixtures at end of 2017 was $21,000

Depreciation expense for the year is $6,000

Common stock $100,000

Retained earnings at the end of 2017 is $75,000

Salary expense $42,000

Dividends paid of 25% of net income after tax

Bank loan (or cash) is a plug

Based on your first projections, answer the following:

1.Operating expense are _____________

2. Net income after tax is _____________

3. Accounts receivable balance is ______________

4. Purchases for year is ________________

5. Cash or bank loan balance is _______________

Based on your revised projections, answer the following:

6. Net income before taxes is _______________

7. Retained earnings at December 31, 2018 is _______________

8. Accounts payable balance is ________________

9. Inventory balance is ________________

10. Cash or bank loan balance is ______________