Consider the following income statement for the Heir Jordan Corporation: HEIR JORDAN CORPORATIONIncome StatementSales $ 43,500Cost 34,100 Taxable income $ 9,400Taxes (24%) 2,256 Net income $ 7,144 Dividends$ 2,515 Addition to retained earnings4,629 The balance sheet for the Heir Jordan Corporation follows. HEIR JORDAN CORPORATIONBalance SheetAssets Liabilities and Owners’ Equity Current assets Current liabilities Cash$ 2,550Accounts payable$ 2,400Accounts receivable3,800Notes payable5,100 Inventory9,000Total$ 7,500 Total$ 15,350Long-term debt$ 24,000 Owners’ equity Fixed assets Common stock and paid-in surplus$ 16,000Net plant and equipment$ 38,000Retained earnings5,850 Total$ 21,850 Total assets$ 53,350Total liabilities and owners’ equity$ 53,350 Prepare a pro forma balance sheet, assuming an increase in sales of 15 percent, no new external debt or equity financing, and a constant payout ratio

The question is based on the concept of Financial Accounting.

Answered: Consider the following income statement…

Century 21 Accounting General Journal

11th Edition

ISBN:9781337680059

Author:Gilbertson

Publisher:Gilbertson

Chapter17: Financial Statement Analysis

Section17.4: Analyzing Financial Statements Using Financial Ratios

Problem 1WT

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Consider the following income statement for the Heir Jordan Corporation:

HEIR JORDAN CORPORATION
Income Statement
Sales		$ 43,500
Cost		34,100

Taxable income		$ 9,400
Taxes (24%)		2,256

Net income		$ 7,144

Dividends	$ 2,515
Addition to retained earnings	4,629

The balance sheet for the Heir Jordan Corporation follows.

HEIR JORDAN CORPORATION
Balance Sheet
Assets		Liabilities and Owners’ Equity
Current assets		Current liabilities
Cash	$ 2,550	Accounts payable	$ 2,400
Accounts receivable	3,800	Notes payable	5,100

Inventory	9,000	Total	$ 7,500

Total	$ 15,350	Long-term debt	$ 24,000

		Owners’ equity
Fixed assets		Common stock and paid-in surplus	$ 16,000
Net plant and equipment	$ 38,000	Retained earnings	5,850

		Total	$ 21,850

Total assets	$ 53,350	Total liabilities and owners’ equity	$ 53,350

Prepare a pro forma balance sheet, assuming an increase in sales of 15 percent, no new external debt or equity financing, and a constant payout ratio

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