Use the percent-of-sales method to prepare a pro forma income statement for the year ended December...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Use the percent-of-sales method to prepare a pro forma income statement for the year ended December 31, 2020, for Saw Lumber, Inc. Saw Lumber, Inc. estimates that its sales in 2020 will be $4,500,000. Interest expense is to remain unchanged at $105,000 and the firm plans to pay cash dividends of $150,000 during 2020. The income statement for the year ended December 31, 2019 is shown below. Income Statement Saw Lumber, Inc. For the Year Ended December 31, 2019 Sale revenue Less: Cost of goods sold Gross profits Less Operating expenses Operating profits Less: Interest expense Net income before taxes 315,000 Less: Taxes (40%) 126,000 Net income after taxes 189,000 Less: Cash dividends 120,000 To: Retained earnings 69,000 Based on your calculations, how is the accumulated retained earnings account on the pro forma balance sheet projected to change between 2019 and 2020? A. Decrease by $57,000 from the prior year. B. Decrease by $52,500 from the prior year. C. Increase by $57,000 from the prior year. D. Increase by $52,500 from the prior year. $4,200,000 3,570,000 630,000 210,000 420,000 105,000 Use the percent-of-sales method to prepare a pro forma income statement for the year ended December 31, 2020, for Saw Lumber, Inc. Saw Lumber, Inc. estimates that its sales in 2020 will be $4,500,000. Interest expense is to remain unchanged at $105,000 and the firm plans to pay cash dividends of $150,000 during 2020. The income statement for the year ended December 31, 2019 is shown below. Income Statement Saw Lumber, Inc. For the Year Ended December 31, 2019 Sale revenue Less: Cost of goods sold Gross profits Less Operating expenses Operating profits Less: Interest expense Net income before taxes 315,000 Less: Taxes (40%) 126,000 Net income after taxes 189,000 Less: Cash dividends 120,000 To: Retained earnings 69,000 Based on your calculations, how is the accumulated retained earnings account on the pro forma balance sheet projected to change between 2019 and 2020? A. Decrease by $57,000 from the prior year. B. Decrease by $52,500 from the prior year. C. Increase by $57,000 from the prior year. D. Increase by $52,500 from the prior year. $4,200,000 3,570,000 630,000 210,000 420,000 105,000
Expert Answer:
Answer rating: 100% (QA)
Answer Solution For the year ended December 31 2020 Sales Revenue Less Cost of goods sold ... View the full answer
Related Book For
Principles Of Managerial Finance
ISBN: 978-0136119463
13th Edition
Authors: Lawrence J. Gitman, Chad J. Zutter
Posted Date:
Students also viewed these finance questions
-
The condensed single-step income statement for the year ended December 31, 2014, of Conti Chemical Company, a distributor of farm fertilizers and herbicides, follows. Selected accounts from Conti...
-
The condensed single-step income statement for the year ended December 31, 20Ã9, of Sunderland Chemical Company, a distributor of farm fertilizers and herbicides, appears as follows: Selected...
-
Income statement for the year ended December 31, 2008 sales(200,000 units) $1,200,000 - cost of good sold 800,000 - groos profit 400,000 - then operating expenses - selling $280,000 - administrative...
-
Midwest Inc. is a medium-size company that has been in business for 20 years. The industry has become very competitive in the last few years, and Midwest has decided that it must grow if it is going...
-
During fiscal year 2012, Sprinkle Doughnuts reported a net income of $134.9 million. Sprinkle received $1.3 million from the sale of other businesses. Sprinkle made capital expenditures of $10.1...
-
1. What makes a CEO's job so complex? Use the mini-case to provide examples that help support your answer. 2. Is it a good practice to rehire a former CEO who has retired? Please explain the...
-
The accountant for Flenderson Roofing, Inc., posted adjusting entries (a) through (e) to the accounts at December 31, 2010. Selected balance sheet accounts and all the revenues and expenses of the...
-
Elina Siljander owns Elinas Stained Glass in Helsinki, Finland. The business produces and sells three different types of stained glass windows: small, medium, and large. Elina has two full-time...
-
Use the information provided in Table 6 to calculate the cost to issue a life insurance policy, including receiving and processing applications for each product. An activity-based costing system...
-
Alabama Atlantic is a lumber company that has three sources of wood and five markets to be supplied. The annual availability of wood at sources 1, 2, and 3 is 15, 20, and 15 million board feet,...
-
Describe at least three characteristics of a good salesperson. Do you have any or all of these characteristics? What is appealing to you about a profession in selling? What is not appealing to you...
-
Question 1: Soccer roster generator Imagine you have been given a list of 22 soccer players along with their performance scores (out of 11): Player Name Performance Score (PS) James 1 Robert 2 3 4...
-
e) A 30kg beam is loaded as shown in Figure 1. Calculate the forces acting on Support A and Support B. (10 marks) A 1.0m 80N 250N 60N 1.25m 2.5m 3m Figure 1 Loaded beam (Q1 e) B
-
Ankaran Enterprises currently has $ 8 0 0 in cash, and total assets of $ 2 0 , 7 0 0 . The company owes $ 1 , 2 0 0 to suppliers for merchandise and $ 4 , 7 0 0 to the bank for a long - term loan....
-
Complete the getAverage() method returning actual average of int1, int2, and int3. * 1 point public class Three Int { int int1 = 5; int int2 = 7; int int3 = 4; public double getAverage () { } return }
-
What amount would you have after 10 years by investing $400 at the end of every month if your investment earns 14% compounded quarterly?
-
The use of the class name here tells the computer which class to look in to find the method. It also lets you distinguish between Poker.playGame() and other potential playGame() methods defined in...
-
Suppose that you are part of a virtual team and must persuade other team members on an important matter (such as switching suppliers or altering the project deadline). Assuming that you cannot visit...
-
Beck Corporation has one issue of preferred stock and one issue of common stock outstanding. Given Becks stockholders equity account that follows, determine the original price per share at which the...
-
Willow Enterprises is considering the acquisition of Steadfast Corp. in a stock swap transaction. Currently, Willows stock is selling for $45 per share. Although Steadfasts shares are currently...
-
Lara Fredericks is interested in two mutually exclusive investments. Both investments cover the same time horizon of 6 years. The cost of the first investment is $10,000, and Lara expects equal and...
-
Does the fact that selling is included as part of the promotional mix weaken or strengthen its role as a sub-element of marketing?
-
Discuss the role and function of selling.
-
Comment on why the proposed changes to sales processes are necessary. Also, which changes would you recommend in terms of their: (a) selling activities? (b) sales value proposition?
Study smarter with the SolutionInn App