- 1 Consider The Following Recent Financial Statements For The Shor Company 2019 Income Statement Sales 4 000 Cogs 3 00 1 (50.72 KiB) Viewed 111 times
1. Consider the following recent financial statements for the Shor Company: 2019 Income Statement Sales 4,000 COGS (3,000) EBIT 1,000 Interest Expense (200) Taxable income 800 Taxes (40%) (320) Net Income 480 Dividends Addition to R.E. 0 480 2019 Balance Sheet 400 Accounts Payable 1,000 Total Current Liabilities 1,600 3,000 Long-term debt Cash A/R Inventory Total Current Assets 1,000 1,000 2,000 Fixed Assets 5,000 Common Stock Retained Earnings Total Equity Total Liabilities 2,000 3,000 5,000 8,000 Total Assets 8,000 Use the following assumptions in your answers below: sales will grow by 20% For the 2020 forecast, COGS, cash, accounts receivable, inventory, fixed assets, and account payable will remain at the same % of sales as in 2019. long-term debt will remain at 2019 values any external financing will come from issuance of long-term debt. If excess funds are available, they will be used to pay down long-term debt.
a. Construct a 2020 Forecasted Income Statement using the % of sales method. Use the following table to present your answer (4 points): 2020 Income Statement Item Value Sales COGS EBIT Interest expense 200 Taxable income Taxes (40%) Net Income Dividends 0 Addition to R.E. b. Construct a 2020 Forecasted balance sheet using the % of sales method. Use the following table to present your answer (6 points): 2020 Balance Sheet Item Value Item Value Cash A/P A/R Total current liab. Inventory Total current assets Long-term debt Common stock Fixed assets Retained earnings Total equity Total Total