The Budda-Bing Manufacturing Company Preparing Pro Forma Financial Statements for 2019 Budda-Bing Manufacturing is planning to implement
Question:
The Budda-Bing Manufacturing Company Preparing Pro Forma Financial Statements for 2019
Budda-Bing Manufacturing is planning to implement a major plant-modernization program to improve its competitive position. Included will be construction of a state-of- the-art manufacturing facility that will cost $400,000 in 2019 and is expected to lower the company's variable cost per tonne of steel. Tony and Pauli, experienced budget analysts, have been charged with preparing a forecast of the firm's 2019 financial position assuming construction of the proposed new facility. They plan to use the 2018 financial statements presented above along with the forecasts for other financial accounts provided in the following table.
a. Use the historic and projected financial data provided to prepare a pro forma income statement and balance sheet for the year ended December 31, 2019.
b. Will Budda-Bing Manufacturing Company need to obtain external financing to fund construction of the proposed facility? Explain. Prepare a Statement of EFR.
c. How would you recommend Budda-Bing raise the required Financing? What options might be available if the company wanted to explore all opportunities other than using their line of credit?