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LG 5 P4-18 Pro forma balance sheet Randy & Wiskers Enterprises reported sales of $15.5 mil- lion for the 2015 financial year. In order to identify the financial needs for the 2016 financial year, you were requested to compile a pro forma balance sheet. The balance sheet as of December 31, 2015 (shown on the next page) and other additional infor- mation are as follows. Additional information (1) The balance sheet items vary directly with sales: Accounts receivable (15%), In- ventory (15%), Accounts payable (10%), and net profit margin (2%). (2) All other balance sheet items remain unchanged. (3) Minimum cash balance of $520,000 is desired. (4) New equipment costing $20,000 will be purchased during 2016, and the net fixed assets will increase to $5,815,000. (5) Accruals will increase to $660,000. (6) Long-term debt is not expected to be repaid in full, and no common stock will be repurchased. (7) The dividend payout will remain unchanged at 50% of net profits. (8) Sales are expected to decrease to $15,000,000. Randy & Wiskers Enterprises Balance Sheet December 31, 2015 (5000) Assets Liabilities and stockholders' equity Cash Accounts payable Accruals Other current liabilities $ 500 350 1,500 2,300 Total current assets $4,650 5,800 $10,450 Marketable securities Accounts receivable Inventories Net fixed assets Total assets Total current liabilities Long-term debt Total liabilities Common equity $1,870 600 150 $2,620 2,000 4,620 5,830 Total liabilities and stockholders' equity $10,450 Based on the information provided, answer the following: a. Prepare a pro forma balance sheet as at December 31, 2016. b. Identify and describe the needs as indicated by the pro forma balance sheet in part a.

LG 5 P4-18 Pro forma balance sheet Randy & Wiskers Enterprises reported sales of $15.5 mil- lion for the 2015 financial year. In order to identify the financial needs for the 2016 financial year, you were requested to compile a pro forma balance sheet. The balance sheet as of December 31, 2015 (shown on the next page) and other additional infor- mation are as follows. Additional information (1) The balance sheet items vary directly with sales: Accounts receivable (15%), In- ventory (15%), Accounts payable (10%), and net profit margin (2%). (2) All other balance sheet items remain unchanged. (3) Minimum cash balance of $520,000 is desired. (4) New equipment costing $20,000 will be purchased during 2016, and the net fixed assets will increase to $5,815,000. (5) Accruals will increase to $660,000. (6) Long-term debt is not expected to be repaid in full, and no common stock will be repurchased. (7) The dividend payout will remain unchanged at 50% of net profits. (8) Sales are expected to decrease to $15,000,000. Randy & Wiskers Enterprises Balance Sheet December 31, 2015 (5000) Assets Liabilities and stockholders' equity Cash Accounts payable Accruals Other current liabilities $ 500 350 1,500 2,300 Total current assets $4,650 5,800 $10,450 Marketable securities Accounts receivable Inventories Net fixed assets Total assets Total current liabilities Long-term debt Total liabilities Common equity $1,870 600 150 $2,620 2,000 4,620 5,830 Total liabilities and stockholders' equity $10,450 Based on the information provided, answer the following: a. Prepare a pro forma balance sheet as at December 31, 2016. b. Identify and describe the needs as indicated by the pro forma balance sheet in part a.

Accounting (Text Only)
Accounting (Text Only)
26th Edition
ISBN:9781285743615
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter16: Statement Of Cash Flows
Section: Chapter Questions
Problem 16.3APE: Changes in current operating assets and liabilities-indirect method Alpenrose Corporations...
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LG 5 P4-18 Pro forma balance sheet Randy & Wiskers Enterprises reported sales of $15.5 mil- lion for the 2015 financial year. In order to identify the financial needs for the 2016 financial year, you were requested to compile a pro forma balance sheet. The balance sheet as of December 31, 2015 (shown on the next page) and other additional infor- mation are as follows. Additional information (1) The balance sheet items vary directly with sales: Accounts receivable (15%), In- ventory (15%), Accounts payable (10%), and net profit margin (2%). (2) All other balance sheet items remain unchanged. (3) Minimum cash balance of $520,000 is desired. (4) New equipment costing $20,000 will be purchased during 2016, and the net fixed assets will increase to $5,815,000. (5) Accruals will increase to $660,000. (6) Long-term debt is not expected to be repaid in full, and no common stock will be repurchased. (7) The dividend payout will remain unchanged at 50% of net profits. (8) Sales are expected to decrease to $15,000,000. Randy & Wiskers Enterprises Balance Sheet December 31, 2015 (5000) Liabilities and stockholders' equity Accounts payable $1,870 Accruals 600 Other current liabilities 150 $2,620 2,000 4,620 5,830 Assets Cash Marketable securities Accounts receivable Inventories $ 500 350 1,500 2,300 Total current assets $4,650 5,800 $10,450 Net fixed assets Total assets Total current liabilities Long-term debt Total liabilities Common equity Total liabilities and stockholders' equity $10,450 Based on the information provided, answer the following: a. Prepare a pro forma balance sheet as at December 31, 2016. b. Identify and describe the needs as indicated by the pro forma balance sheet in part a.
Transcribed Image Text:LG 5 P4-18 Pro forma balance sheet Randy & Wiskers Enterprises reported sales of $15.5 mil- lion for the 2015 financial year. In order to identify the financial needs for the 2016 financial year, you were requested to compile a pro forma balance sheet. The balance sheet as of December 31, 2015 (shown on the next page) and other additional infor- mation are as follows. Additional information (1) The balance sheet items vary directly with sales: Accounts receivable (15%), In- ventory (15%), Accounts payable (10%), and net profit margin (2%). (2) All other balance sheet items remain unchanged. (3) Minimum cash balance of $520,000 is desired. (4) New equipment costing $20,000 will be purchased during 2016, and the net fixed assets will increase to $5,815,000. (5) Accruals will increase to $660,000. (6) Long-term debt is not expected to be repaid in full, and no common stock will be repurchased. (7) The dividend payout will remain unchanged at 50% of net profits. (8) Sales are expected to decrease to $15,000,000. Randy & Wiskers Enterprises Balance Sheet December 31, 2015 (5000) Liabilities and stockholders' equity Accounts payable $1,870 Accruals 600 Other current liabilities 150 $2,620 2,000 4,620 5,830 Assets Cash Marketable securities Accounts receivable Inventories $ 500 350 1,500 2,300 Total current assets $4,650 5,800 $10,450 Net fixed assets Total assets Total current liabilities Long-term debt Total liabilities Common equity Total liabilities and stockholders' equity $10,450 Based on the information provided, answer the following: a. Prepare a pro forma balance sheet as at December 31, 2016. b. Identify and describe the needs as indicated by the pro forma balance sheet in part a.
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