Question

1. Next year, National Beverage Company will increase its plant, property, and equipment by $4,000,000 with a plant expansion. The inventories will grow by 30%, accounts receivable will grow by 20%, and marketable securities will reduce by 50% to help finance the expansion.
   
   Assume all other asset accounts will remain the same and the company will use long-term debt to finance the remaining expansion costs (no change in common stock or retained earnings).
   
   Using this information and the following balance sheet for National Beverage Company for 2013, prepare a pro forma balance sheet for 2014. How much additional debt will the company need using this pro forma balance sheet?

National Beverage Company
Balance sheet for the year ending December 31, 2013
ASSETS		LIABILITIES
Current Assets:		Current liabilities
Cash	$           2,440,000	Accounts payable	$    5,622,000
Marketable securities	$           1,656,000	Other current liabilities	$    3,268,000
Accounts receivable	$           2,704,000	Total current liabilities	$    8,890,000
Inventories	$           1,641,000	Long-term liabilities
Total current assets	$           8,441,000	Long-term debt	$    1,314,000
Long-term assets		Other long-term liabilities	$    2,839,000
PPE	$         13,686,000	Total long-term liabilities	$    4,153,000
Goodwill	$           1,403,000	Total liabilities	$ 13,043,000
Intangible assets	$           6,433,000	OWNER'S EQUITY
Total long-term assets	$         21,522,000	Common stock	$    6,861,000
TOTAL ASSETS	$         29,963,000	Retained earnings	$ 10,059,000
		Total owners' equity	$ 16,920,000
		TOTAL LIABILITIES AND OWNERS' EQUITY	$ 29,963,000

Answer 1

National Beverage Company
Balance sheet for the year ending December 31, 2014
ASSETS		LIABILITIES
Current Assets:		Current liabilities
Cash	$                 2,440,000.00	Accounts payable	$                 5,622,000.00
Marketable securities	$                     828,000.00	Other current liabilities	$                 3,268,000.00
Accounts receivable	$                 3,244,800.00	Total current liabilities	$                 8,890,000.00
Inventories	$                 2,133,300.00	Long-term liabilities
Total current assets	$                 8,646,100.00	Long-term debt	$                 5,519,100.00
Long-term assets		Other long-term liabilities	$                 2,839,000.00
PPE	$               17,686,000.00	Total long-term liabilities	$                 8,358,100.00
Goodwill	$                 1,403,000.00	Total liabilities	$               17,248,100.00
Intangible assets	$                 6,433,000.00	OWNER'S EQUITY
Total long-term assets	$               25,522,000.00	Common stock	$                 6,861,000.00
TOTAL ASSETS	$               34,168,100.00	Retained earnings	$               10,059,000.00
		Total owners' equity	$               16,920,000.00
		TOTAL LIABILITIES AND OWNERS' EQUITY	$               34,168,100.00

Long term debt is the balancing figure.

Additional debt = 5519100-1314000 =

4205100

WORKINGS