Question
Using the 2012 financial statements for DRE Corporation and this additional information, prepare a pro forma income statement and balance sheet for the year 2013.
Using the 2012 financial statements for DRE Corporation and this additional information, prepare a pro forma income statement and balance sheet for the year 2013. Determine the discretionary financing needed (DFN) and assume that if the DFN is positive, the company will increase long-term debt, and if DFN is negative, the company will pay back some long-term debt. Sales for next year (2013) are expected to increase by $300,000 to $1,800,000. The firm is running efficiently and at full capacity so that all assets and spontaneous liabilities are expected to increase proportionally with sales. The dividend payout ratio for 2013 will be 40%.
| DRE Corporation |
| 2012 Financial Statements |
| Income Statement ($) | ||
| Sales | 1,500,000 | |
| Net Income | 250,000 | |
| Balance Sheet ($) | ||
| Cash | 400,000 | |
| Accounts Receivable | 450,000 | |
| Inventory | 350,000 | |
| Property, Plant, & Equipment | 650,000 | |
| Total Assets | 1,850,000 | |
| Accounts Payable | 200,000 | |
| Short Term Notes Payable | 250,000 | |
| Long-term Debt | 550,000 | |
| Common Stock | 200,000 | |
| Retained Earnings | 650,000 | |
| Total Liabilities and Equity | 1,850,000 |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered 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