2018 Income Statement Net sales $ 18,400 Cost of goods sold 15,200 Depreciation 700 Earnings before I and T $ 2,500 Interest paid 70 Taxable Income $ 2,430 Taxes 960 Net income $ 1,470 Dividends $ 390 Inhale, Inc 2018 Balance Sheet 2018 2018 Cash $ 7,600 Accounts payable $ 6,840 Accounts rec 2,200 ...

Projected total assets for 2019 is 20240 To project retained earnings for 2019 start by computing ne ...

2018 Income Statement Net sales $ 18,400 Cost of goods sold 15,200 Depreciation 700 Earnings before I

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Question:

2018 Income Statement
Net sales	$	18,400
Cost of goods sold		15,200
Depreciation		700
Earnings before I and T	$	2,500
Interest paid		70
Taxable Income	$	2,430
Taxes		960
Net income	$	1,470
Dividends	$	390

Inhale, Inc. 2018 Balance Sheet
	2018		2018
Cash	$	7,600	Accounts payable	$	6,840
Accounts rec.		2,200	Long-term debt		700
Inventory		8,200	Common stock	$	8,400
Total	$	18,000	Ret. Earnings		11,660
Net fixed assets		9,600
Total assets	$	27,600	Total liabilities & equity	$	27,600

Inhale, Inc., is currently operating at maximum capacity. All costs, assets, and current liabilities vary directly with sales. The tax rate and the dividend payout ratio will remain constant. In 2019, no new equity will be raised and sales are projected to increase by 10 percent. Construct the pro formas for 2019 (at first leave interest and long term debt unchanged). Then answer the following questions.

Projected total assets = $______

Hint: Divide each quantity on the left-hand side of the 2018 Balance Sheet by the 2018 Sales to compute the percentages of sales. New sales in 2019 will be 10% higher than in 2018, so compute sales for 2019. Apply the percentages you computed for 2018 to the new sales number for 2019 to construct each line item on the Balance Sheet for 2018. Read off the Total Assets at the bottom.

Projected 2013 Retained Earnings = $______

Hint. Proceed by constructing the Income Statement for 2019. Start with the new Sales (10% higher than 2012). Compute Cost of Goods Sold and Depreciation as percentages of sales in 2018 and apply the same percentages to 2019 Sales to get CoGS and Depr for 2019. When you get to taxes, things will be different. Compute the Taxes for 2018 as % of Taxable Income, not Sales, for 2018. Apply the same percentage to the 2019 Taxable Income to get Taxes for 2019. Similarly, compute Dividends for 2018 as % of 2018 Net Income, not Sales. Apply that percentage to the 2019 Net Income to get 2019 Dividends. The Addition to the Retained Earnings for 2019 is equal to the Net Income minus Dividends. Add the Addition to RE to the 2018 Retained Earnings from the 2018 Balance Sheet and you have the new 2019 Retained Earnings.

Additional new debt required = $______