Question

Amounts are in thousands of dollars (except number of shares and price per share:

Kiwi Fruit Company Balance Sheet
Cash and equivalents	$570
Operating assets	650
Property, plant, and equipment	2,700
Other assets	110
Total assets	$4,030
Current liabilities	920
Long-term debt	1,280
Other liabilities	120
Total liabilities	$2,320
Paid in capital	$340
Retained earnings	1,370
Total equity	$1,710
Total liabilities and equity	$4,030

Kiwi Fruit Company Income Statement
Net sales	7,800
Cost of goods sold	-5,900
Gross profit	1,900
Operating expense	-990
Operating income	910
Other income	105
Net interest expense	-200
Pretax income	$815
Income tax	-285
Net income	$530
Earnings per share	$2
Shares outstanding	265,000
Recent price	$34.50

Kiwi Fruit Company Cash Flow Statement
Net income	$530
Depreciation and amortization	175
Changes in operating assets	-90
Changes in current liabilities	-120
Operating cash flow	$495
Net additions to properties	$180
Changes in other assets	-80
Investing cash flow	$100
Issuance/redemption of long-term debt	($190)
Dividends paid	-220
Financing cash flow	($410)
Net cash increase	$185

Prepare a pro forma income statement, balance sheet, and cash flow statement for Kiwi Fruit assuming a 10 percent increase in sales. (Leave no cells blank - be certain to enter "0" wherever required. Negative amounts should be indicated by a minus sign. Input all amounts as thousands of dollars. Round earnings per share to 2 decimal places. Omit the "$" sign in your response.)

Answer 1

The proforma income statement is prepared as below:

Kiwi Fruit Company
Proforma Income Statement
Net Sales [7,800*(1+10%)]	8,580
Cost of Goods Sold [5,900*(1+10%)]	-6,490
Gross Profit	2,090
Operating Expense	-990
Operating Income	1,100
Other Income	105
Net interest expense	-200
Pretax Income	1,005
Income Tax (285/815*1,005)	-351
Net income	654
Earnings per share	2.47
Shares outstanding	265,000

_____

The proforma cash flow statement is given as below:

Kiwi Fruit Company
Proforma Cash Flow Statement
Net Income	654
Depreciation and Amortization (No Change)	175
Change in Operating Assets (No Change)	-90
Change in Current Liabilities (No Change)	-120
Operating Cash Flow	619
Net Additions to Property	0
Change in Other Assets	0
Investing Cash Flow	0
Issuance/Redemption of Long-Term Debt	0
Dividends Paid	-220
Financing Cash Flow	-220
Net Cash Increase	$399

_____

The proforma balance sheet is given as follows:

Kiwi Fruit Company
Proforma Balance Sheet
Cash and Equivalents (570+399)	969
Operating Assets (650+90)	740
Property, Plant, and Equipment (2,700-175)	2,525
Other Assets	110
Total Assets	$4,344
Current Liabilities (920-120)	800
Long-Term Debt	1,280
Other Liabilities	120
Total Liabilities	2,200
Paid in Capital	340
Retained Earnings (1,370 + 654 - 220)	1,804
Total Equity	2,144
Total Liabilities and Equity	$4,344