Romney and Associates wishes to forecast its net income for the year 2014. Romney has assembled balance

Question:

Romney and Associates wishes to forecast its net income for the year 2014. Romney has assembled and income statement data for 2013 and has also done a forecast of the for 2014. In addition, Romney has estimated that its sales in 2014 will rise to $3,600. This information is summarized in the following table.
Balance Sheet .............................................................. 2013 ...............Forecasted
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 40 ................. $ 48
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .450 .................. 540
Property, plant, and equipment (net) . . . . . . . . . . . . . . . . . . . . . . . . . 500 .................. 700
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 990 .............. $1,288
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . $ 190 ................ $ 228
Bank loans payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500 ................... 400
Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . 300 ................... 660
Total liabilities and stockholders' equity . . . . . . . . . . . . . . . . . . . . $ 990 ............. $1,288
Income Statement.......................................................2013 ........... 2014 Forecasted
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,000 ..................... $3,600
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,200
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,800
Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,440
Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. $ 260
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Income before taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$ 210
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 126
Instructions:
Prepare a forecasted income statement for 2014. Clearly state what assumptions you make?
Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...