Problems

ANSWERS TO ASSIGNMENT 3 1.It is important to remember that candor will not maturation by the same percentage as the opposite assets. If every other item on the income relation and remnant shroud growings by 10 percent, the pro forma income pedagogy and eternal rest canvass will look like this: pro forma income statement pro forma eternal rest weather canvas tent sales$17,600Assets$9,790Debt$5,610 Costs13,750 justice4,180 plunder income$3,850 numerate$9,790 summation$9,790 In word for the equalizer sheet to balance, right must(prenominal) be: integrity = descend liabilities and Equity Debt Equity = $9,790 5,610 Equity = $4,180 Equity increased by: Equity increase = $4,180 3,800 Equity increase = $380 sack income is $3,850 unless equity only increased by $380. Thus, a dividend of $3,850 $380 or $3470 must have been paid. Dividends is the plug variable. 2.Here we are given the dividend amou nt, so dividends is not a plug variable. If the company pays out one-half of its net income as dividends, the pro forma income statement and balance sheet will look like this: professional person forma income statement Pro forma balance sheet Sales$17,600Assets$9,790Debt$5,100 Costs13,750Equity5,725 Net income$3,850Total$9,790Total$10,825 Dividends$1,925 Add.

to RE1,925 Note that the balance sheet does not balance. This is due to EFN which is: EFN = Total assets Total liabilities and equity EFN = $9,790 10,825 EFN = $1,035 3.An increase of sales to $5,192 is an increase of: Sales increase = ($5,192 $4,400) / $4,! 400 Sales increase = .18 or 18% Assuming costs and assets increase proportionally, the pro forma financial statements will look like this: Pro forma income statement Pro forma balance sheet Sales$5,192Assets$15,812Debt$9,100 Costs3,168Equity6,324 Net income$2,024Total$15,812Total$15,424 If no dividends are...If you want to get a full essay, assure it on our website: OrderCustomPaper.com

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