CHAPTER 10: FINANCIAL FORECASTING AND PLANNING QUESTION AND ANSWER ST-1. (Financial forecasting) Use the percent of sales method to prepare a pro forma income statement for Calico Sales Co. Inc. Projected sales for next year equal $4 million. Cost of goods sold equals 70 percent of sales, administrative expense equals $500,000, and depreciation expense is $300,000. Interest expense equals $50,000, and income is taxed at a rate of 40 percent. The firm plans to spend $200,000 during the period to renovate its office facility and will retire $150,000 in notes payable. Finally, selling expense equals 5 percent of sales.

CHAPTER 10: FINANCIAL FORECASTING AND PLANNING QUESTION AND ANSWER ST-1. (Financial forecasting) Use the percent of sales method to prepare a pro forma income statement for Calico Sales Co. Inc. Projected sales for next year equal $4 million. Cost of goods sold equals 70 percent of sales, administrative expense equals $500,000, and depreciation expense is $300,000. Interest expense equals $50,000, and income is taxed at a rate of 40 percent. The firm plans to spend $200,000 during the period to renovate its office facility and will retire $150,000 in notes payable. Finally, selling expense equals 5 percent of sales.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter13: Capital Structure Concepts

Section: Chapter Questions

Problem 6P

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