I need help urgently could you please explain the solution of this question??? Provincial Imports, Inc., has assembled last year's financial statements (income statement and balance sheet and financial projections for use in preparing financial plans for the coming year.Information related to financial projections for next year is as follows:(1) Projected sales are$6,006,000.(2) Cost of goods sold last year includes$998,000in fixed costs.(3) Operating expense last year includes$246,000in fixed costs.(4) Interest expense will remain unchanged.(5) The firm will pay cash dividends amounting to35%of net profits after taxes.(6) Cash and inventories will double.(7) Marketable securities, notes payable, long-term debt, and common stock will remain unchanged.(8) Accounts receivable, accounts payable, and other current liabilities will change in direct response to the change in sales.(9) A new computer system costing$364,000will be purchased during the year. Total depreciation expense for the year will be$116,000.(10) The tax rate will remain at40%.a. Prepare a pro forma income statement for next year, using the fixed cost data given to improve the accuracy of the percent-of-sales method.b. Prepare a pro forma balance sheet for next year, using the information given and the judgmental approach. Include a reconciliation of the retained earnings account.c. Analyze these statements, and discuss the resulting external financing required. Complete the liabilities and equity part of the pro forma balance sheet for next year: (Round to the nearest dollar.) Pro Forma Balance SheetProvincial Imports, Inc.for Next Year(Judgmental Method)Accounts payable$ Taxes payable Notes payable 205,000Other current liabilities Total current liabilities$ Long-term debt 512,200Common stock Retained earnings External funds required Total liabilities and stockholders’ equity$ Data tableLess. Operaling expenSESO35,000$1,410,000Operating profitsLess: Interest expense201,000Net profits before taxesLess: Taxes (rate = 40%)$1,209,000483,600Net profits after taxes$725,400Less: Cash dividends253,890To retained earnings$471,510(Click on the icon here Din order to copy the contents of the data table below into a spreadsheet.)Provincial Imports, Inc. Balance Sheetfor the Year Just EndedAssetsLiabilities and Stockholders' EquityAccounts payableTaxes payableNotes payableCash$190,000$700,000Marketable securities230,00095,000Accounts receivable635,000205,000Inventories508,000Other current liabilities4,800Total current assets$1,563,000Total current liabilities$1,004,800Net fixed assets1,408,000Long-term debt512,200Common stock77,000Retained earnings1,377,000Total assets$2,971,000Total liabilities and equity$2,971,000 Click on the icon here Din order to copy the contents of the data table below into a spreadsheet.)Provincial Imports, Inc. Income Statementfor the Year Just EndedSales revenue$5,006,000Less: Cost of goods soldGross profitsLess: Operating expenses2,741,000$2,265,000855,000$1,410,000Operating profitsLess: Interest expense201,000Net profits before taxes$1,209,000Less: Taxes (rate = 40%)483,600Net profits after taxes$725,400Less: Cash dividends253,890To retained earnings$471,510Click on the icon here a in order to copy the contents of the data table below into a spreadsheet.)Provincial Imports, Inc. Balance Sheetfor the Year Just EndedAssetsLiabilities and Stockholders' EquityAccounts payableTaxes payableCash$190,000$700,000Marketable securities230,00095,000

Performa income statement and balance sheet are prepared to have an idea about next year’s…

Provincial Imports, Inc., has assembled last year's financial statements (income statement and balance sheet and financial projections for use in preparing financial plans for the coming year. Information related to financial projections for next year is as follows: (1) Projected sales are $6,006,000. (2) Cost of goods sold last year includes $998,000 in fixed costs. (3) Operating expense last year includes $246,000 in fixed costs. (4) Interest expense will remain unchanged. (5) The firm will pay cash dividends amounting to 35% of net profits after taxes. (6) Cash and inventories will double. (7) Marketable securities, notes payable, long-term debt, and common stock will remain unchanged. (8) Accounts receivable, accounts payable, and other current liabilities will change in direct response to the change in sales. (9) A new computer system costing $364,000 will be purchased during the year. Total depreciation expense for the year will be $116,000. (10) The tax rate will remain at 40%. a. Prepare a pro forma income statement for next year, using the fixed cost data given to improve the accuracy of the percent-of-sales method. b. Prepare a pro forma balance sheet for next year, using the information given and the judgmental approach. Include a reconciliation of the retained earnings account. c. Analyze these statements, and discuss the resulting external financing required

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter16: Multistate Corporate Taxation

Section: Chapter Questions

Problem 35P

See similar textbooks

Related questions

Question

I need help urgently could you please explain the solution of this question???

Provincial Imports, Inc., has assembled last year's financial statements (income statement and balance sheet

and financial projections for use in preparing financial plans for the coming year.

Information related to financial projections for next year is as follows:

(1) Projected sales are

$6,006,000.

(2) Cost of goods sold last year includes

$998,000

in fixed costs.

(3) Operating expense last year includes

$246,000

in fixed costs.

(4) Interest expense will remain unchanged.

(5) The firm will pay cash dividends amounting to

35%

of net profits after taxes.

(6) Cash and inventories will double.

(7) Marketable securities, notes payable, long-term debt, and common stock will remain unchanged.

(8) Accounts receivable, accounts payable, and other current liabilities will change in direct response to the change in sales.

(9) A new computer system costing

$364,000

will be purchased during the year. Total depreciation expense for the year will be

$116,000.

(10) The tax rate will remain at

40%.

a. Prepare a pro forma income statement for next year, using the fixed cost data given to improve the accuracy of the percent-of-sales method.

b. Prepare a pro forma balance sheet for next year, using the information given and the judgmental approach. Include a reconciliation of the retained earnings account.

c. Analyze these statements, and discuss the resulting external financing required.

Complete the liabilities and equity part of the pro forma balance sheet for next year: (Round to the nearest dollar.)

Pro Forma Balance Sheet
Provincial Imports, Inc.
for Next Year
(Judgmental Method)
Accounts payable	$
Taxes payable
Notes payable		205,000
Other current liabilities
Total current liabilities	$
Long-term debt		512,200
Common stock
Retained earnings
External funds required
Total liabilities and stockholders’ equity	$

Data table
Less. Operaling expenSES
O35,000
$1,410,000
Operating profits
Less: Interest expense
201,000
Net profits before taxes
Less: Taxes (rate = 40%)
$1,209,000
483,600
Net profits after taxes
$725,400
Less: Cash dividends
253,890
To retained earnings
$471,510
(Click on the icon here D
in order to copy the contents of the data table below into a spreadsheet.)
Provincial Imports, Inc. Balance Sheet
for the Year Just Ended
Assets
Liabilities and Stockholders' Equity
Accounts payable
Taxes payable
Notes payable
Cash
$190,000
$700,000
Marketable securities
230,000
95,000
Accounts receivable
635,000
205,000
Inventories
508,000
Other current liabilities
4,800
Total current assets
$1,563,000
Total current liabilities
$1,004,800
Net fixed assets
1,408,000
Long-term debt
512,200
Common stock
77,000
Retained earnings
1,377,000
Total assets
$2,971,000
Total liabilities and equity
$2,971,000

Click on the icon here D
in order to copy the contents of the data table below into a spreadsheet.)
Provincial Imports, Inc. Income Statement
for the Year Just Ended
Sales revenue
$5,006,000
Less: Cost of goods sold
Gross profits
Less: Operating expenses
2,741,000
$2,265,000
855,000
$1,410,000
Operating profits
Less: Interest expense
201,000
Net profits before taxes
$1,209,000
Less: Taxes (rate = 40%)
483,600
Net profits after taxes
$725,400
Less: Cash dividends
253,890
To retained earnings
$471,510
Click on the icon here a in order to copy the contents of the data table below into a spreadsheet.)
Provincial Imports, Inc. Balance Sheet
for the Year Just Ended
Assets
Liabilities and Stockholders' Equity
Accounts payable
Taxes payable
Cash
$190,000
$700,000
Marketable securities
230,000
95,000

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 4 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.