Znap Inc. is a young company founded by a UCLA graduate. Annual Balance Sheet and Income...

Transcribed Image Text:

Znap Inc. is a young company founded by a UCLA graduate. Annual Balance Sheet and Income Statement of Znap are provided below (as of Dec 31st 2021). a) (20 points) Company would like to grow its sales by 25% from 2021 to 2022. Given the following conditions, produce Znap's proforma statements for 2022: 1. Sales and Costs(COGS&Adm&Dep) grow at 25%. 2. Interest for 2022 is 10% of 2022 Long Term Debt. (You can check to see that Interest was 10% of Long Term Debt for 2021 as well.) 3. Tax rate is 20%. 4. Company would like to preserve its dividend policy as in 2021. 5. Company would like to purchase back $50 worth of its own stock in 2022. 6. All accounts on the Assets side grow at the same rate as sales. 7. Accounts Payable grows at the same rate as sales. 8. No new stock will be issued in 2022. 9. Company meets half of its external financing need by borrowing short term and half of it by borrowing long term. Company ZNAP, Pro Forma Income Statement Sales Costs (COGS&Adm&Dep) Interest Taxable Income Taxes Net Income Dividends Additions to Retained Earnings 2021 $1,000 700 160 140 28 112 0 112 2022 (Projected) Current Assets Cash Accounts Receivable Inventory Total Current Assets Net Fixed Assets Total Assets Company ZNAP, Pro Forma Balance Sheet 2021 160 440 600 1,200 1,800 3,000 % of Sales 2022 (Projected Current Liabilities Accounts Payable Notes Payable Total Current Liabilities Long-Term Debt Owners' Equity Stock Retained Earnings Total Liabilities and Owners' Equity 2021 300 100 400 1,600 888 112 3,000 %of Sales 2022 (Projected) Znap Inc. is a young company founded by a UCLA graduate. Annual Balance Sheet and Income Statement of Znap are provided below (as of Dec 31st 2021). a) (20 points) Company would like to grow its sales by 25% from 2021 to 2022. Given the following conditions, produce Znap's proforma statements for 2022: 1. Sales and Costs(COGS&Adm&Dep) grow at 25%. 2. Interest for 2022 is 10% of 2022 Long Term Debt. (You can check to see that Interest was 10% of Long Term Debt for 2021 as well.) 3. Tax rate is 20%. 4. Company would like to preserve its dividend policy as in 2021. 5. Company would like to purchase back $50 worth of its own stock in 2022. 6. All accounts on the Assets side grow at the same rate as sales. 7. Accounts Payable grows at the same rate as sales. 8. No new stock will be issued in 2022. 9. Company meets half of its external financing need by borrowing short term and half of it by borrowing long term. Company ZNAP, Pro Forma Income Statement Sales Costs (COGS&Adm&Dep) Interest Taxable Income Taxes Net Income Dividends Additions to Retained Earnings 2021 $1,000 700 160 140 28 112 0 112 2022 (Projected) Current Assets Cash Accounts Receivable Inventory Total Current Assets Net Fixed Assets Total Assets Company ZNAP, Pro Forma Balance Sheet 2021 160 440 600 1,200 1,800 3,000 % of Sales 2022 (Projected Current Liabilities Accounts Payable Notes Payable Total Current Liabilities Long-Term Debt Owners' Equity Stock Retained Earnings Total Liabilities and Owners' Equity 2021 300 100 400 1,600 888 112 3,000 %of Sales 2022 (Projected)

Answer rating: 100% (QA)

Here are the proforma statements for Znap Inc for 2022 Pro Forma Income Statement Sales 1000 x 125 1250 Costs COGSAdmDep 700 x 125 875 Interest Longterm debt 10 1600 10 160 Taxable Income 1250 875 160 ... View the full answer