Question
Use the information provided below to complete the tables as shown. Assume sales will increase by 30% in 2013. Income Statement Vector Manufacturing Income Statement
Use the information provided below to complete the tables as shown. Assume sales will increase by 30% in 2013.
Income Statement
Vector Manufacturing Income Statement | ||
2012 Actual | 2013 Pro Forma | |
Sales revenue | $125,000 |
|
Less: Cost of goods sold |
| |
Fixed cost | $50,000 |
|
Variable cost (40% of sales) | $50,000 |
|
Gross Profit | $25,000 |
|
Less: Operating expenses |
| |
Fixed expense | $5,000 |
|
Variable expense (5% of sales) | $6,250 |
|
Operating profits | $13,750 |
|
Less: Interest expense (all fixed) | $1,000 |
|
Net profits before taxes | $12,750 |
|
Less: Taxes (15% of net profit before taxes) | $1,913 |
|
Net profits after taxes | $10,838 |
|
Balance Sheet
Use the following information and the table below to complete the 2013 balance sheet.
- Minimum cash balance of $5,000 is required.
- Marketable securities will remain unchanged.
- Accounts receivable on average represent 45 days of sales (about 1/8 of year or 12.5%).
- Ending inventory will remain unchanged.
- A new machine costing $20,000 will be purchased, and total depreciation for the year is $5,000.
- Purchases will represent 30% of annual sales. It will take 75 days to pay the accounts payable, so accounts payable should equal 75 days/365 days or 20.5% of the firms purchases.
- Taxes payable will equal 25% of the firms tax liability as shown on the income statement (see taxes on income statement).
- Notes payable will be used for additional financing needs (plug).
- No change in other current liabilities is expected.
- No changes to long-term debt or common stock are expected.
- Retained earnings will equal the beginning balance from 2012 plus the 2013 profit (see pro forma income statement). A $5,000 dividend payment will be made in 2013.
Vector Manufacturing Balance Sheet | ||
12/31/12 | 12/31/13 | |
Assets |
| |
Cash | $5,000 |
|
Marketable securities | $4,000 |
|
Accounts receivable | $12,000 |
|
Inventories | $15,000 |
|
Total current assets | $36,000 |
|
Net fixed assets | $50,000 |
|
Total assets | $86,000 |
|
| ||
Liabilities and Stockholders' Equity |
| |
Accounts payable | $6,000 |
|
Taxes payable | $500 |
|
Notes payable | $6,500 |
|
Other current liabilities | $3,000 |
|
Total current liabilities | $16,000 |
|
Long-term debt | $15,000 |
|
Total liabilities | $31,000 |
|
Common stock | $35,000 |
|
Retained earnings | $20,000 |
|
Total liabilities and stockholders' equity | $86,000 |
|
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