Pro forma income statement and balance sheet

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Reference no: EM13832758

Pro Forma Income Statement and Balance Sheet

Below is the income statement and balance sheet for Blue Bill Corporation for 2013. Based on the historical statements and the additional information provided, construct the firm's pro forma income statement and balance sheet for 2014.

Blue Bill Corporation  

Income Statement

For the year ended 2013
Projected
  2012 2013
2014
Revenue $60,000 $63,000
 
Cost of goods sold 42,000 44,100
 
Gross margin 18,000 18,900
 
SG&A expense 6,000 6,300
 
Depreciation expense 1,800 2,000
 
Earnings Before Interest and Taxes (EBIT) 10,200 10,600
 
Interest expense 1,500 1,800
 
Taxable income 8,700 8,800
 
Income Tax Expense 3,045 3,080
 
Net income 5,655 5,720
 
Dividends 750 800
 
To retained earnings $4,905 $4,920
 

Additional income statement information:

Sales will increase by 5% in 2014 from 2013 levels.

COGS and SG&A will be the average percent of sales for the last 2 years.

Depreciation expense will increase to $2,200.

Interest expense will be $1,900.

The tax rate is 35%.

Dividend payout will increase to $850.

Blue Bill Corporation


Balance Sheet


December 31, 2013

Projected
  2013

2014
Current assets  

 
Cash $8,000

 
Accounts receivable 3,150

 
Inventory 9,450

 
Total current assets      20,600

 
Property, plant, and equipment (PP&E)      28,500

 
Accumulated depreciation      16,400

 
Net PP&E      12,100

 
Total assets $32,700

 
   

 
Current liabilites  

 
Accounts payable $3,780

 
Bank loan (10%) 3,200

 
Other current liabilities 1,250

 
Total current liabilities 8,230

 
Long-term debt (12%) 4,800

 
Common stock 1,250

 
Retained earnings 18,420

 
Total liabilities and equity $32,700

 

Additional balance sheet information:

The minimum cash balance is 12% of sales.

Working capital accounts (accounts receivable, accounts payable, and inventory) will be the same percent of sales in 2014 as they were in 2013.

$8,350 of new PP&E will be purchased in 2014.

Other current liabilities will be 3% of sales in 2014.

There will be no changes in the common stock or long-term debt accounts.

The plug figure (the last number entered that makes the balance sheet balance) is bank loan.

Reference no: EM13832758

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