ro forma balance sheet Peabody & Peabody has 2019 sales of $10.5 million. It wishes to analyze expected performance and financing needs for 2021—2 years ahead. Given the following information, respond to parts a. and b. (1) The percents of sales for items that vary directly with sales are as follows: Accounts receivable; 11.9%, Inventory; 17.7%; Accounts payable, 13.6%; Net profit margin, 3.5%. (2) Marketable securities and other current liabilities are expected to remain unchanged. (3) A minimum cash balance of $482,000 is desired. (4) A new machine costing $653,000 will be acquired in 2020, and equipment costing $848,000 will be purchased in 2021. Total depreciation in 2020 is forecast as $288,000, and in 2021 $388,000 of depreciation will be taken. (5) Accruals are expected to rise to $504,000 by the end of 2021. (6) No sale or retirement of long-term debt is expected. (7) No sale or repurchase of common stock is expected. (8) The dividend payout of 50% of net profits is expected to continue. (9) Sales are expected to be $11.6 million in 2020 and $11.7 million in 2021. (10) The December 31, 2019, balance sheet is here (PICTURE) a. Prepare a pro forma balance sheet dated December 31, 2021. b. Discuss the financing changes
ro forma balance sheet Peabody & Peabody has 2019 sales of $10.5 million. It wishes to analyze expected performance and financing needs for 2021—2 years ahead. Given the following information, respond to parts a. and b. (1) The percents of sales for items that vary directly with sales are as follows: Accounts receivable; 11.9%, Inventory; 17.7%; Accounts payable, 13.6%; Net profit margin, 3.5%. (2) Marketable securities and other current liabilities are expected to remain unchanged. (3) A minimum cash balance of $482,000 is desired. (4) A new machine costing $653,000 will be acquired in 2020, and equipment costing $848,000 will be purchased in 2021. Total depreciation in 2020 is forecast as $288,000, and in 2021 $388,000 of depreciation will be taken. (5) Accruals are expected to rise to $504,000 by the end of 2021. (6) No sale or retirement of long-term debt is expected. (7) No sale or repurchase of common stock is expected. (8) The dividend payout of 50% of net profits is expected to continue. (9) Sales are expected to be $11.6 million in 2020 and $11.7 million in 2021. (10) The December 31, 2019, balance sheet is here (PICTURE) a. Prepare a pro forma balance sheet dated December 31, 2021. b. Discuss the financing changes
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter16: Retained Earnings And Earnings Per Share
Section: Chapter Questions
Problem 3MC: Prince Corporations accounts provided the following information at December 31, 2019: What should be...
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Question
Pro forma balance sheet Peabody & Peabody has
2019
sales of
$10.5
million. It wishes to analyze expected performance and financing needs for
2021—2
years ahead. Given the following information, respond to parts a. and b.(1) The percents of sales for items that vary directly with sales are as follows: Accounts receivable;
11.9%,
Inventory;
17.7%;
Accounts payable,
13.6%;
Net profit margin,
3.5%.
(2) Marketable securities and other current liabilities are expected to remain unchanged.
(3) A minimum cash balance of
$482,000
is desired.(4) A new machine costing
depreciation in
forecast as
$653,000
will be acquired in
2020,
and equipment costing
$848,000
will be purchased in
2021.
Total 2020
is $288,000,
and in
2021
$388,000
of depreciation will be taken.(5) Accruals are expected to rise to
$504,000
by the end of
2021.
(6) No sale or retirement of long-term debt is expected.
(7) No sale or repurchase of common stock is expected.
(8) The dividend payout of
50%
of net profits is expected to continue.(9) Sales are expected to be
$11.6
million in
2020
and
$11.7
million in
2021.
(10) The December 31,
2019,
balance sheet is here (PICTURE)
a. Prepare a pro forma balance sheet dated December 31,
2021.
b. Discuss the financing changes suggested by the statement prepared in part
(a).
Transcribed Image Text:Data Table
(Click on the icon here D
in order to copy the contents of the data table below into a spreadsheet.)
Leonard Industries Balance Sheet December 31, 2019
Assets
Liabilities and Stockholders' Equity
Cash
$399,000
Accounts payable
$1,405,000
Marketable securities
195,000
Accruals
403,000
Accounts receivable
1,201,000
Other current liabilities
80,200
Inventories
1,798,000
Total current liabilities
$1,888,200
Total current assets
$3,593,000
Long-term debt
1,983,800
Net fixed assets
3,996,000
Common stock
3,717,000
Total liabilities and
Total assets
$7,589,000
stockholders' equity
$7,589,000
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