Randy & Wiskers Enterprises reported sales of $15.5 mil lion for the 2015 financial year. In...

  

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Randy & Wiskers Enterprises reported sales of $15.5 mil lion for the 2015 financial year. In order to identify the financial needs for the 201 financial year, you were requested to compile a pro forma balance sheet. The bala sheet as of December 31, 2015 (shown on the next page) and other additional infor mation are as follows. Additional information (1) The balance sheet items vary directly with sales: Accounts receivable (15%), ventory (15%), Accounts payable (10%), and net profit margin (2%). (2) All other balance sheet items remain unchanged. CHAPTER 4 Cash Flow and Financial Planning (3) Minimum cash balance of $520,000 is desired. (4) New equipment costing $20,000 will be purchased during 2016, and the net fixed assets will increase to $5,815,000. (5) Accruals will increase to $660,000. (6) Long-term debt is not expected to be repaid in full, and no common stock will be repurchased. (7) The dividend payout will remain unchanged at 50% of net profits. (8) Sales are expected to decrease to $15,000,000. Randy & Wiskers Enterprises Balance Sheet December 31, 2015 (5000) Assets Liabilities and stockholders' equity Cash Accounts payable $1,870 Accruals 600 Other current liabilities. 150 Marketable securities Accounts receivable Inventories Total current assets Net fixed assets Total assets $ 500 350 1,500 2,300 $ 4,650 5,800 $10,450 Total current liabilities Long-term debt Total liabilities Common equity Total liabilities and stockholders' equity 203 $2,620 2,000 4,620 5,830 $10,450 Based on the information provided, answer the following: a. Prepare a pro forma balance sheet as at December 31, 2016. b. Identify and describe the needs as indicated by the pro forma balance sheet in part a. Randy & Wiskers Enterprises reported sales of $15.5 mil lion for the 2015 financial year. In order to identify the financial needs for the 201 financial year, you were requested to compile a pro forma balance sheet. The bala sheet as of December 31, 2015 (shown on the next page) and other additional infor mation are as follows. Additional information (1) The balance sheet items vary directly with sales: Accounts receivable (15%), ventory (15%), Accounts payable (10%), and net profit margin (2%). (2) All other balance sheet items remain unchanged. CHAPTER 4 Cash Flow and Financial Planning (3) Minimum cash balance of $520,000 is desired. (4) New equipment costing $20,000 will be purchased during 2016, and the net fixed assets will increase to $5,815,000. (5) Accruals will increase to $660,000. (6) Long-term debt is not expected to be repaid in full, and no common stock will be repurchased. (7) The dividend payout will remain unchanged at 50% of net profits. (8) Sales are expected to decrease to $15,000,000. Randy & Wiskers Enterprises Balance Sheet December 31, 2015 (5000) Assets Liabilities and stockholders' equity Cash Accounts payable $1,870 Accruals 600 Other current liabilities. 150 Marketable securities Accounts receivable Inventories Total current assets Net fixed assets Total assets $ 500 350 1,500 2,300 $ 4,650 5,800 $10,450 Total current liabilities Long-term debt Total liabilities Common equity Total liabilities and stockholders' equity 203 $2,620 2,000 4,620 5,830 $10,450 Based on the information provided, answer the following: a. Prepare a pro forma balance sheet as at December 31, 2016. b. Identify and describe the needs as indicated by the pro forma balance sheet in part a.

Answer rating: 100% (QA)

Answer Solution Answer a Proforma Balance sheet as at December 312016 in 000 Assets Liab... View the full answer