Use the following information to answer questions:

It is now January 2018. The year 2017 finished well. The finalized year-end financial statements for 2017 are provided in the excel file associated with this assignment.

Randolf and Tenisa at Comfy Home would like the accountant to prepare pro-forma financial statements for 2018 based on an optimistic sales forecast. Tenisa has won the business of a large corporate client and the couple believe that Comfy Home revenues will increase by 40% in 2018 as compared with the year 2017.

Randolf and Tenisa provide the following additional information to the accountant to prepare the pro-forma statements:

• No new investments in furniture and fixtures or buildings and property are expected for 2018.
• Of the $500,000 in building and properties at year-end 2017, $325,000 represents buildings and $175,000 represents property (land). The buildings are being depreciated straight-line over 10 years with no salvage value.
• The furniture and fixtures are being depreciated straight-line over 15 years with no salvage value.
• The $45,000 current portion of the bank loan will be paid in 2018. Of the $255,000 in long term debt, another $45,000 comes due in 2019.
• Comfy Home does not plan to obtain any additional loans in 2018.
• The interest rate for Comfy Home's borrowing has declined recently to 8%. It is expected to be the average rate of interest for Comfy Home short and long-term borrowings in 2018. Use total beginning borrowings to estimate the interest expense for 2018.
• Comfy Home's expected tax rate is 20%. Comfy Home has no outstanding deferred tax assets or deferred tax liabilities.
• Comfy Home is not planning on any dividend payments in 2018. No contributions or disbursements to/from owners' equity are foreseen.
• Comfy Home's insurance premium covers its buildings and property as well as liability and is not expected to increase in 2018.
• Use Cash as the plug in the pro-forma financial statements

QUESTION:

Using the actual financial statements for 2017 (in the excel snapshot below), please make a pro-forma balance sheet and income statement for 2018 using the percent of sales method. For any financial statement line items where no additional information is provided to indicate otherwise, assume the line item changes proportionally to sales. Note: Please use excel formulas for all calculations and do not round any intermediate steps. If you round during intermediate steps, you may get rounding errors resulting in incorrect answers.

More Questions:

Questions:

What is the forecasted total revenue on Comfy Home's 2018 pro-forma financial statements?

What is the forecasted marketing expenses on Comfy Home's 2018 pro-forma financial statements?

What is the forecasted depreciation expense on Comfy Home's 2018 pro-forma financial statements?

What is the forecasted interest expense on Comfy Home's 2018 pro-forma financial statements?

What is the forecasted cost of goods sold on Comfy Home's 2018 pro-forma financial statements?

What is the forecasted insurance expense on Comfy Home's 2018 pro-forma financial statements?

What is the forecasted furniture and fixtures on Comfy Home's 2018 pro-forma financial statements?

What is the forecasted inventories on Comfy Home's 2018 pro-forma financial statements?

What is the forecasted current portion of bank loan on Comfy Home's 2018 pro-forma financial statements?

What is the forecasted bank loan (long term portion only) on Comfy Home's 2018 pro-forma financial statements?

What is the forecasted contributed capital on Comfy Home's 2018 pro-forma financial statements?

What is the forecasted accounts receivable on Comfy Home's 2018 pro-forma financial statements?

What is the forecasted deferred revenue on Comfy Home's 2018 pro-forma financial statements?

What is the forecasted cash on Comfy Home's 2018 pro-forma financial statements?

T45 fic A B E F G H J - K L M N O P 1 C COMFY HOME COMPANY Balance Sheet As of December 31, 2016 $ S S 110,000 140,000 310.000 25,000 585,000 Current Liabilities: Accounts Payable Salaries and wages payable Current portion of bank loan Deferred revenue Total Current Liabilities $ 90,000 $ 20,000 $ 45,000 $ 15,000 $ 170,000 S S Non-Current Liabilities: Bank Loan Total Non-Current Liabilities 120,000 450.000 (154,000) 416,000 $ S $ s $ 300,000 $ 300,000 Owners' Equity: Contributed Capital Retained earnings Total Equity $ 250,000 S 281,000 $ 531,000 S 1,001,000 Total Liabilities and Owners' Equity $1,001,000 2 3 4 5 6 Current Assets: 7 Cash 8 Accounts receivable 9 Inventories 10 Prepaid expenses 11 Total Current Assets * 12 13 Non-Current Assets: 14 14 Furniture and fixtures 15 Buildings and property 16 (Accumulated Depreciation) 17 Total Non-Current Assets 18 19 20 21 22 Total Assets 23 24 25 26 27 28 29 29 29 30 30 31 32 Current Assets: 35 34 Accounts receivable 35 Inventories 36 Prepaid expenses 37 Total Current Assets 38 38 39 Non-Current Assets: 40 Furniture and fixtures 41 Buildings and property 42 (Accumulated Depreciation) 43 Total Non-Current Assets 44 45 46 47 COMFY HOME COMPANY Balance Sheet As of December 31, 2017 COMFY HOME COMPANY Income Statement For the year ending December 31, 2017 33 Cash S 95,000 310,000 358,000 33.000 796,000 S S S S Current Liabilities: Accounts Payable Salaries and wages payable Current portion of bank loan Deferred revenue Total Current Liabilities $ 192,000 $ 28,000 $ 45,000 $ 23,000 $ 288,000 S Total Revenue Cost of Goods Sold Gross Profit Salaries and wages Marketing expenses Selling, General, and Administrative Insurance expense Depreciation expense Operating Profit Interest Taxes Net Income $ 1,598,000 $ 958,000 $ 640,000 195,000 S 48,000 S 03.000 93,000 S 30 000 39,000 $ 40.000 40,000 S S 225,000 S 27,000 S 35,000 S 163,000 2 Non-Current Liabilities: Bank Loan Total Non-Current Liabilities $ 255,000 $ 255,000 S S S $ 135,000 500,000 (194,000) 441,000 Owners' Equity: Contributed Capital Retained earnings Total Equity $ 250,000 S 444,000 $ 694,000 T45 fic A B E F G H J - K L M N O P 1 C COMFY HOME COMPANY Balance Sheet As of December 31, 2016 $ S S 110,000 140,000 310.000 25,000 585,000 Current Liabilities: Accounts Payable Salaries and wages payable Current portion of bank loan Deferred revenue Total Current Liabilities $ 90,000 $ 20,000 $ 45,000 $ 15,000 $ 170,000 S S Non-Current Liabilities: Bank Loan Total Non-Current Liabilities 120,000 450.000 (154,000) 416,000 $ S $ s $ 300,000 $ 300,000 Owners' Equity: Contributed Capital Retained earnings Total Equity $ 250,000 S 281,000 $ 531,000 S 1,001,000 Total Liabilities and Owners' Equity $1,001,000 2 3 4 5 6 Current Assets: 7 Cash 8 Accounts receivable 9 Inventories 10 Prepaid expenses 11 Total Current Assets * 12 13 Non-Current Assets: 14 14 Furniture and fixtures 15 Buildings and property 16 (Accumulated Depreciation) 17 Total Non-Current Assets 18 19 20 21 22 Total Assets 23 24 25 26 27 28 29 29 29 30 30 31 32 Current Assets: 35 34 Accounts receivable 35 Inventories 36 Prepaid expenses 37 Total Current Assets 38 38 39 Non-Current Assets: 40 Furniture and fixtures 41 Buildings and property 42 (Accumulated Depreciation) 43 Total Non-Current Assets 44 45 46 47 COMFY HOME COMPANY Balance Sheet As of December 31, 2017 COMFY HOME COMPANY Income Statement For the year ending December 31, 2017 33 Cash S 95,000 310,000 358,000 33.000 796,000 S S S S Current Liabilities: Accounts Payable Salaries and wages payable Current portion of bank loan Deferred revenue Total Current Liabilities $ 192,000 $ 28,000 $ 45,000 $ 23,000 $ 288,000 S Total Revenue Cost of Goods Sold Gross Profit Salaries and wages Marketing expenses Selling, General, and Administrative Insurance expense Depreciation expense Operating Profit Interest Taxes Net Income $ 1,598,000 $ 958,000 $ 640,000 195,000 S 48,000 S 03.000 93,000 S 30 000 39,000 $ 40.000 40,000 S S 225,000 S 27,000 S 35,000 S 163,000 2 Non-Current Liabilities: Bank Loan Total Non-Current Liabilities $ 255,000 $ 255,000 S S S $ 135,000 500,000 (194,000) 441,000 Owners' Equity: Contributed Capital Retained earnings Total Equity $ 250,000 S 444,000 $ 694,000