(12-2 Noso Textile's 2005 financial statements are shown here: Noso TEXTILE: BALANCE SHEET AS OF DECEMBER...
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(12-2 Noso Textile's 2005 financial statements are shown here: Noso TEXTILE: BALANCE SHEET AS OF DECEMBER 31, 2005 (S THOUSANDS) $ 1,080 6,480 9,000 Current assets S16,560 12,600 Cash Accounts payable Accruals Notes payable Current liabilities Long-term bonds Common stock Retained earnings Total liabilities and equity $29,160 $ 4,320 2,880 2,100 $ 9,300 3,500 Receivables Inventories Net fixed assets 3,500 12,860 Total assets $29, 160 Noso TEXTILE: INCOME STATEMENT POR DECEMBER 31, 2005 (S THOUSANDS) Sales $36,000 (32,440) $ 3,560 560) S 3,000 ( 1,200) $ 1,800 $ 810 $ 990 Operating costs Farnings before interest and taxes Interest Earnings before taxes Taxes (40%) Net Income Dividends (45%) Addition to retained earnings a. Suppose 2006 sales are projected to increase by 15 percent over 2005 sales. Determine the additional funds needed. Assume that the company was operating at full capacity in 2005, that it cannot sell off any of its fixed assets, and that any required financing will be borrowed as notes payable. Also, assume that assets, spontaneous liabilities, and operating costs are expected to increase by the same percentage as sales. Use the projected balance sheet method to develop a pro forma balance sheet and income statement for December 31, 2006. (Do not incorporate any financing feedback effects. Use the pro forma income statement to determine the addition to retained earnings.) (12-2 Noso Textile's 2005 financial statements are shown here: Noso TEXTILE: BALANCE SHEET AS OF DECEMBER 31, 2005 (S THOUSANDS) $ 1,080 6,480 9,000 Current assets S16,560 12,600 Cash Accounts payable Accruals Notes payable Current liabilities Long-term bonds Common stock Retained earnings Total liabilities and equity $29,160 $ 4,320 2,880 2,100 $ 9,300 3,500 Receivables Inventories Net fixed assets 3,500 12,860 Total assets $29, 160 Noso TEXTILE: INCOME STATEMENT POR DECEMBER 31, 2005 (S THOUSANDS) Sales $36,000 (32,440) $ 3,560 560) S 3,000 ( 1,200) $ 1,800 $ 810 $ 990 Operating costs Farnings before interest and taxes Interest Earnings before taxes Taxes (40%) Net Income Dividends (45%) Addition to retained earnings a. Suppose 2006 sales are projected to increase by 15 percent over 2005 sales. Determine the additional funds needed. Assume that the company was operating at full capacity in 2005, that it cannot sell off any of its fixed assets, and that any required financing will be borrowed as notes payable. Also, assume that assets, spontaneous liabilities, and operating costs are expected to increase by the same percentage as sales. Use the projected balance sheet method to develop a pro forma balance sheet and income statement for December 31, 2006. (Do not incorporate any financing feedback effects. Use the pro forma income statement to determine the addition to retained earnings.)
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Answer rating: 100% (QA)
2005 2006 Cash 1080 1242 Receivables 6480 7452 Inventories 9000 10350 Current Assets 16560 19044 Net ... View the full answer
Related Book For
Financial and Managerial Accounting the basis for business decisions
ISBN: 978-0078025778
17th edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello
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