Pro Forma Statements Problem

A) 1. Income Statement Balance Sheet

Year Ended 2017 12/31/17

Sales $27,000 Cash $ 500

Cost of Goods Sold 18,900 Accounts Receivable 4,500

Gross Profit 8,100 Inventory 3,150

Expenses 6,000 Gross Fixed Assets 54,000

Earnings Before Tax 2,100 Accumulated Depreciation 21,600

Tax (.5) 1,050 Net Fixed Assets 32,400

Net Income $ 1,050 Total Assets $40,550

Accounts Payable $ 1,575

Notes Payable 19,175

Accrued Tax 263

Common Stock 15,787

Retained Earnings 3,750

Total Debt & Equity $40,550

A. Based on the 2017 Financial Statements above, compute Pro Formas for 2018 under the percent of sales approach using the following assumptions:

- Straight- line depreciation over 10 year life, all assets same age, and

- No Growth no inflation (i.e., everything ceteris paribus).

B. Based on the 2017 Financial Statements above, compute Pro Formas for 2018 using the percent of sales method using the following assumptions:

- 20% growth rate in sales, and

- 15% dividend payout

I understand how to do Part B; I'm not sure what to do with Part A? Each part is asking for a solution for 2018 Pro Forma Statements. Attached is a picture of the numbers.

Pro Forma Statements Problem Income Statement Year Ended 2017 Balance Sheet 12/31/17 1. $ 500 4,500 ? 150 Sales Cost of Goods Sold Gross Profit Expenses Earnings Before Tax Tax (5) Net Income $27,000 18,900 8,100 6.000 2,100 1050 S L050 Cash Accounts Receivable Inventory Gross Fixed Assets Accumulated Depreciation21.600 Net Fixed Assets Total Assets 54,000 32 400 $40.550 Accounts Payable Notes Payable Accrued Tax Common Stock Retained Earnings Total Debt & Equity S 1,575 19,175 263 15,787 3.750 $40,550