Question

Pro Forma balance sheet- Peabody & Peabody has 2019 sales of 10.4 milion. it wishes to analyze expected performance and financing needs for 2021- 2 years ahead. Given the following information respond to parts a. and b.

1. the percent of sales for items that vary directly with sales are as follows: Accounts receivable 12.2%, inventory 18.2%, accounts payable, 13.6% , Net Profit margin 3.3%

2. Marketable securties and other current liabilites are expected to remain unchanged.

3. a minimum cash balance of $483,000 is desired.

4. A new machins costing $648,000 will be acquired in 2020 and equipement costing $853,00 wil be purchased in 2021. Total deprication in 2020 is forecast as $286,00 and in 2021 $392,000 of depreciation will be taken.

5. Accurals are expected to rise $502,000 by the end of 2021.

6. No sales or retirement of long-term debt is expected

7. No sale or repurchase of common stock is expected

8. the dividend payout of 50% of net profits is expected to continue.

9. Sales are expected to be $11.5 million in 2020 and $11.3 million in 2021.

10. The december 31, 2019 balance sheet is here.

a. Prepare a pro forma balance sheet dated December​ 31,2021

b. Discuss the financing changes suggested by the statement prepared in part (a​).

Leonard Industries Balance Sheet December​ 31, 20192019
Assets			Liabilities and​ Stockholders' Equity
Cash	$397,000		Accounts payable	$1,405,000
Marketable securities	201,000		Accruals	$398,000
Accounts receivable	1,201,000		Other current liabilities	$80,500
Inventories	1,805,000		Total current liabilities	$1,883,500
Total current assets	$3,604,000		​Long-term debt	1,999,500
Net fixed assets	$3,998,000		Common stock	3,719,000
Pro Forma Balance Sheet Peabody & PeaBody December 31, 2021 Assets Current assets Cash $______ Marketable securties $_____ Accounts Receivable $______ Inventories $_____ total Current assets $______ Net Fixed assets $____ Total assets $____			Total liabilities & stockholder equity	$7,602,000

Answer 1

Pro Forma Balance Sheet Peabody & Peabody December 31, 2021
		Assets
Current assets
Cash	483000
Marketable securties	201000
Accounts Receivable 11.3 [email protected]%	1378600
Inventories11.3 [email protected]%	2056600
total Current assets	4119200
Net Fixed assets	4,821,000
Total assets	13059400
liabilities and stockholders’ equity
Current liabilities
Accounts payable 11.3 [email protected]%	1536800
Accruals	502000
Other current liabilities	80500
Total current liabilities	2119300
Long-term debts	1999500
Total liabilities
Common equity	4,095,200
External funds required	4,845,400
Total liabilities and stockholders’ equity	13059400

Workings

1Beginning net fixed assets (January 1, 2019)	$3,998,000.00
Plus: Fixed asset outlays	1501000
Less: Depreciation expense	-678000
Ending net fixed assets (December 31, 2021)	$4,821,000.00

Beginning common equity (January 1, 2019)	$3,719,000.00
Plus: Net profits after taxes (2020)	379500
Net profits after taxes (2021)	372900
Less: Dividends paid (2020)	-189750
Dividends paid (2021)	-186450
Ending common equity (December 31, 2021)	$4,095,200.00