Using the 2019 trial balance and additional information below, prepare the projected (2020)

financial statements for Walnut Grove. The prior year data (provided) is the starting point for

your projections, and then each of the assumptions listed below will also be used.

Excel workbook which contains the following information:

? Tab 1: 2019 Trial Balance (provided in this document)

? Tab 2: 2020 Projected Income Statement

? Tab 3: 2020 Projected Balance Sheet

? Tab 4: 2020 Projected Statement of Cash Flows Assumptions:

1. Sales will change as follows:

a. Material & Supplies Sales will increase 8.5%

b. Small Tool Sales will increase 10%

c. Tool Rental Revenue will continue throughout the 2020 year. An average of 20

tools will be rented each week. The weekly rental per tool is $60. Assume that

the average number of tools given will be rented for all 52 weeks.

2. Vendor Compensation will increase consistently with the sum increase of Material &

Supplies Sales and Small Tools Sales.

3. Cost of sales for materials and supplies and small tools will increase proportionately based

on their current percentage of sales, respectively. (HINT: You will need to use vertical

analysis.)

4. Small tools, including blades and other items, is expected to total $8,000 in 2020.

5. Office supplies and postage are expected to increase by 35% during 2020.

6. On January 1st, the company will invest $135,000 in new equipment for its custom cabinet

division.

a. This equipment will have a 5-year life and should be depreciated using the

straight-line method. This purchase represents the only expected change to

property, plant, and equipment.

b. The company will finance the equipment purchased with a 5 year note at 3.65%

interest. You will need to use an amortization schedule to find the principle and

interest payment amounts. The loan is paid monthly.

7. In relation to #6 above, the custom cabinet sales division begins operations in 2020. The

following assumptions must be used to project the impact on the financial statements.

(Hint: You may need to add accounts to the trial balance.)

a. Walnut Grove anticipates that it will sell 110 cabinets at an average selling price

of $2,700.

b. Direct materials per cabinet are $850 per unit.

c. The direct labor per cabinet is 5 hours, and Walnut Grove pays $30.00/hour for

this labor.

d. Factory overhead is calculated at 65% of direct labor.

8. The building is being depreciated over a 39-year life.

9. Because of the new cabinet division, yearly insurance costs will increase by $29,500,

effective January 1. The company prepaid 2 years of this insurance and received a 5%

discount for the 2-year prepayment.

10. On January 1, a new cabinet division manager will be hired at a cost of $55,500. In

additional to the new cabinet division manager, 3 new employees will be hired at an

average wage of $18.50 per hour, employees work an average of 40 hours per week.

Payroll taxes should be calculated at 20% of wages.

11. With 22 weeks remaining in the year, 3 additional employees will be hired at a rate of

$16.50 per hour, based on an average of 36 hours per week.

12. The income tax rate is 21%.

13. At the end of the year, Walnut Grove will have $68,000 in ending inventory.

14. In relation #13, purchases are made evenly throughout the year and are paid in full in the

month following purchase.

15. Sales are collected in full the month following the sale. During the month of December,

invoiced sales totaled $142,500.

16. The sales tax rate is 6.3%.

17. At the end of the year, Walnut Grove has received full payment for 25 custom cabinet

orders that will be completed in January 2021.

A B C D E F G WALNUT GROVE TRIAL BALANCE For the Years Ended December 31, 2019 and December 31, 2020 2019 2020 Debit Credit Debit Credit Cash 185,500 00 Accounts Receivable 125,600 Inventory 55,000 Prepaid Expenses 10 Building 275,000 11 Computers & Software 10,000 12 Furniture & Fixtures 25,000 13 Land 75,000 14 Machinery & Equipment 15 Accumulated Depreciation 15,385 16 Accounts Payable 48,500 17 Payroll Tax Payable 1,050 18 Sales Tax Payable 7,913 19 Unearned Revenue 20 Line of Credit 300,000 300,000 21 Notes Payable 22 Peters, J., Capital 2,500 2,500 23 Peters, M., Capital 2,500 2,500 24 Retained Earnings 258,429 25 Custom Cabinet Sales 26 Material & Supplies Sales 282,714 306,745 27 Small Tool Sales 34,932 38,425 28 Tool Rental Revenue 12,648 62,400 29 Vendor Compensation Revenue 629 O . 30 COGS: Custom Cabinets 31 COGS: Material & Supplies 90,468 98,158 32 COGS: Small Tools 21,309 33 COGS: Wages 33,060 34 Depreciation Expense 8,775 35 Insurance Expense 6,300 36 Office Supplies Expense 1,435 1,937 37 Payroll Tax Expense 5,950 38 Postage Expense 340 459 39 Small Tool Expense 6,041 8,000 40 Interest Expense 11,900 4,511 41 Income Tax Expense 30,522 42 967,200 967,200 43 AA Trial Balance Income Statement Balance Sheet Cash Flows