Ma & Pa Kettle's Chili Company has begun selling a new chili recipe and they want you to help them with next year's budgeted financial statements.Using the worksheet below, complete Ma & Pa's forecast and answer the questions which follow.

Assumptions:

To begin with, Ma & Pa are sure sales will grow 50% next year.Assume that is true.Then assume that COGS, Current Assets, and Current Liabilities all vary directly with Sales (that means if sales grows a certain percentage, then the account in question will grow by that same percentage).Assume that fixed expenses will remain unchanged and that $1,000 worth of new Fixed Assets will be obtained next year.Lastly, the current dividend policy will be continued next year.

Ma & Pa Kettle Chili Company, Inc.

Financial Forecast

Estimated

This yearfor next year

Sales$25,000$37,500

COGS$5,000$7500

Gross Profit$20,000________

Fixed Expenses$3,000________

BeforeTax Profit$17,000________

Tax @ 33.3333%$5,666________

Net Profit$11,334________

Dividends$0 ________

Current Assets$30,000________

Net Fixed Assets$20,000________

Total Assets $50,000________

Current Liabilities$18,000________

Longterm debt$3,000________

Common Stock$9,000________

Retained Earnings$13,000 ________

Total Liabs & Eq$50,000 ________

Amount need to balance the balance sheet________

(Projected total assets minus projected

total liabilities & equity *)