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Using Table 6–13, create a pro forma balance sheet using the percentage of sales method. If net income next year is $50,000, answer the following:  How much did the owners take out of the business?  What is the profit margin for next year?

Using Table 6–13, create a pro forma balance sheet using the percentage of sales method. If net income next year is $50,000, answer the following:  How much did the owners take out of the business?  What is the profit margin for next year?

Corporate Financial Accounting
Corporate Financial Accounting
14th Edition
ISBN:9781305653535
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter14: Financial Statement Analysis
Section: Chapter Questions
Problem 14.9BE
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Using Table 6–13, create a pro forma balance sheet using the percentage of sales method. If net income next year is $50,000, answer the following: 

  1. How much did the owners take out of the business? 
  2. What is the profit margin for next year?

 

TABLE 6–13 Pro forma Balance Sheet Using Percentage of Sales Total Sales Current Year $275,000 Percentage of Sales (%) Forecast Sales Net Year $350,000 Assets Current Assets Cash Accounts Receivable Inventory Total Current Assets Fixed Assets Furniture & Fixtures $ 5,694 19,662 3,381 $28,737 5,595 25,456 $31,051 $59,788 Transporation Equipment Total Fixed Assets Total Assets Liabilities and Owner's Equity Current Liabilities Notes Payable Accrued Taxes Payable Total Current Liabilites Long Term Debt Total Liabilities Owner's Equity Total Liabilities and Owner's Equity $15,456 3,598 $19,054 18,654 $37,708 22,080 $59,788
Transcribed Image Text:TABLE 6–13 Pro forma Balance Sheet Using Percentage of Sales Total Sales Current Year $275,000 Percentage of Sales (%) Forecast Sales Net Year $350,000 Assets Current Assets Cash Accounts Receivable Inventory Total Current Assets Fixed Assets Furniture & Fixtures $ 5,694 19,662 3,381 $28,737 5,595 25,456 $31,051 $59,788 Transporation Equipment Total Fixed Assets Total Assets Liabilities and Owner's Equity Current Liabilities Notes Payable Accrued Taxes Payable Total Current Liabilites Long Term Debt Total Liabilities Owner's Equity Total Liabilities and Owner's Equity $15,456 3,598 $19,054 18,654 $37,708 22,080 $59,788
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