Prepare the firms proforma Balance sheet for 2019 using Sales Forecasting Method. Board Policies: 1- Gross Plant
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Question:
Prepare the firm’s proforma Balance sheet for 2019 using Sales Forecasting Method.
Board Policies: |
1- Gross Plant & Equipment Depreciation ratio is accepted as %20. |
2- All assets in the balance sheet will increase at the same rate as sales increase. |
3- All Current Liabilities in the balance sheet will increase at the same rate as sales. |
4- 100.000 additional Long Term Bonds will take place in 2019. |
5- For long term capital: |
a- 50.000 new preferred stocks will be issued |
b- A long term loan will be activated as 150.000 USD |
b- Additional New stocks will be issued at 200.000 USD |
6- Net Profitability is %20 of total sales. |
7- %30 of Net Profit will be distributed as dividends |
8- Remaining %70 of Net Profit will be retained in the company |
Based on 2019’s projected sales; |
a- Calculate the forecast basis for assets and current liabilities
b- Calculate the amount of Financing Required ( capital deficit)
c- Prepare the Pro-Forma Balance Sheet.
Related Book For
Financial Accounting an introduction to concepts, methods and uses
ISBN: 978-0324789003
13th Edition
Authors: Clyde P. Stickney, Roman L. Weil, Katherine Schipper, Jennifer Francis
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