PLEASE HELP EXPLAIN THE ANSWER FOR QUESTION STEP BY STEP (the correct answer is given)

Given above Income Statement and Balance Sheet for Bo Know only, find the projected EBIT for 2012.

	3,540
	3,920 correct answer
	3,720
	1,968
	3,720

Question 2

Find the projected total assets for 2012

	7,188 correct answer
	7,828
	6,988
	5,488
	8,028

1. Use the following financial statements and financial data to create a pro forma income statement and balance sheet for Bo Knows Profit Corporation. Please determine if they will need additional funding or if they will have excess funding. Bo Knows Profit Corporation Income Statement for Year Ending 2011 Sales $8,800 Less: Costs 5,000 Depreciation 900 EBIT 2,900 Less: Interest 350 EBT 2,550 Taxes 850 Net Income $1,700 Bo Knows Profit Corporation Balance Sheets for End of Years 2010, 2011 2011 2010 2011 2010 Cash 110 170 Accounts Payable 120 135 700 Accounts Receivable 500 Notes Payable 1.400 1.200 Inventory 1.000 1.240 Current Liabilities 1,520 1,335 Current Assets 2,620 2,005 1,810 1,910 Long-term Debt 3.500 2.000 Common Stock Fixed Assets 200 100 (50 shares) Retained Earnings 970 470 Total Assets 5,310 3,910 Total Liab. & Equity 5,310 3,910 Financial Data: 1) Assume that sales will grow by 20%. 2) Accounts Receivable will represent 15% of sales. 3) Inventory is expected to be 20% of sales. 4) Bo Knows will purchase $500 in fixed assets and book $640 in depreciation. 5) All other spontaneous accounts will grow in proportion to sales. 6) Dividend is expected to remain constant. (Hint: you can find current dividend from historical data) 6)