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
  2012 2013
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


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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