Question

Next​ year, National Beverage Company will increase its​ plant, property, and equipment by $ 4039000 with a plant expansion. The inventories will grow by 29 %​, accounts receivable will grow by 23 %​, and marketable securities will be reduced by 52 % 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 balance sheet in the popup​ window, LOADING...​, 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	$	2,490,000	Accounts payable	$	5,611,000
Marketable securities	$	1,640,000	Other current liabilities	$	3,234,000
Accounts receivable	$	2,793,000	Total current liabilities	$	8,845,000
Inventories	$	1,660,000	Long-term liabilities
Total current assets	$	8,583,000	Long-term debt	$	1,301,000
Long-term assets			Other long-term liabilities	$	2,818,000
Plant, property, and equipment	$	13,621,000	Total long-term liabilities	$	4,119,000
Goodwill	$	1,484,000	Total liabilities	$	12,964,000
Intangible assets	$	6,434,000	OWNERS' EQUITY
Total long-term assets	$	21,539,000	Common stock	$	6,851,000
			Retained earnings	$	10,307,000
			Total owners' equity	$	17,158,000
			TOTAL LIABILITIES AND
TOTAL ASSETS	$	30,122,000	OWNERS' EQUITY	$	30,122,000

Complete the​ pro-forma balance sheet for 2014​ below: ​ (Round to the nearest​ dollar.)

National Beverage Company
Balance Sheet for the Year Ending December 31, 2013
ASSETS			LIABILITIES
Current assets			Current liabilities
Cash	$		Accounts payable	$
Marketable securities	$		Other current liabilities	$
Accounts receivable	$		Total current liabilities	$
Inventories	$		Long-term liabilities
Total current assets	$		Long-term debt	$
Long-term assets			Other long-term liabilities	$
Plant, property, and equipment	$		Total long-term liabilities	$
Goodwill	$		Total liabilities	$
Intangible assets	$		OWNERS' EQUITY
Total long-term assets	$		Common stock	$
			Retained earnings	$
			Total owners' equity	$
			TOTAL LIABILITIES AND
TOTAL ASSETS	$		OWNERS' EQUITY

How much additional debt will be estimated using this pro forma balance​ sheet? ​(Round to the nearest​ dollar.)

Answer 1

National Beverage Company
Pro-forma balance sheet for 2014​
ASSETS		LIABILITIES
Current assets		Current liabilities
Cash	24,90,000.00	Accounts payable	56,11,000.00
Marketable securities	7,87,200.00	Other current liabilities	32,34,000.00
Accounts receivable	34,35,390.00
Inventories	21,41,400.00	Long-term liabilities
		Long-term debt	13,01,000.00
Long-term assets		Additional debt	43,09,990.00
Plant, property, and equipment	1,76,60,000.00	Other long-term liabilities	28,18,000.00
Goodwill	14,84,000.00
Intangible assets	64,34,000.00	Owners' Equity
		Common stock	68,51,000.00
		Retained earnings	1,03,07,000.00
	3,44,31,990.00		3,44,31,990.00

Working notes:

1.Company will increase its​ plant, property, and equipment by $ 4039000 with a plant expansion.

Opening plant, property, and equipment	1,36,21,000
Add: Addition	40,39,000
	1,76,60,000

2.The inventories will grow by 29 %

Oping inventory	16,60,000
Add: 29% of inventory	4,81,400
	21,41,400

3.Accounts receivable will grow by 23 %

Accounts receivable	27,93,000
Add: 23% of Accounts receivable	6,42,390
	34,35,390

4.Marketable securities will be reduced by 52 %

Opening Marketable security	16,40,000
Less: 52% of security	8,52,800
	7,87,200