Expert Answer:Module 06 Written Assignment – Financial Statement

Answer & Explanation:For this assignment, you will construct a firm’s projected pro forma and balance sheet. Download the Excel template below and complete the included problem.Financial Statement Forecasting
fin1000_module06_forecasting_assignment.xls

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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 sta
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
Revenue
Cost of goods sold
Gross margin
SG&A expense
Depreciation expense
Earnings Before Interest and Taxes (EBIT)
Interest expense
Taxable income
Income Tax Expense
Net income
Dividends
To retained earnings
2012
$60.000
42.000
18.000
6.000
1.800
10.200
1.500
8.700
3.045
5.655
750
$4.905
2013
$63.000
44.100
18.900
6.300
2.000
10.600
1.800
8.800
3.080
5.720
800
$4.920
Projected
2014
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
2013
Current assets
Cash
Accounts receivable
Inventory
Total current assets
Property, plant, and equipment (PP&E)
Accumulated depreciation
Net PP&E
Total assets
Current liabilites
Accounts payable
$8.000
3.150
9.450
20.600
28.500
16.400
12.100
$32.700
$3.780
Projected
2014
Bank loan (10%)
Other current liabilities
Total current liabilities
Long-term debt (12%)
Common stock
Retained earnings
Total liabilities and equity
3.200
1.250
8.230
4.800
1.250
18.420
$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 s
$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.

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