Question

Complete the projected Balance Sheet and Income Statement for Metza Metza, Inc. at December 31, 2020, given the following information: (you must show step by step calculations ). Also prepare a Common-size analysis of the Balance Sheet and Income Statement. What was their beginning Retained Earnings (actual) account balance at January 1, 2020 given a planned 40% Dividend Payout on December 31, 2020?

Equity Multiplier                                             2.0x

                                    Current Ratio                                                                                          2.5:1

                                    Cash                                                                                                        5.0% of Sales

                                    Quick Asset Ratio                                                                                  1.3:1

                                    Times Interest Earned                                                                           4.0x

                                    Gross Profit Rate                                                                                  40.0% of Sales

                                    Marginal Tax Rate                                                                              50.0%

                                    Operating Expenses                                                                $140,000 + 10.0% of Sales

                                    Accounts Receivable Turnover                                                            6.0x

                                    Accounts Payable                                                                      $60,000.00

                                    Return on Assets                                                                                    3.75%

                                    Common Stock                                                                       $100,000.00

                                    Days Accounts Payable Outstanding                                                 60 days

Note: Operating expenses is comprised of both a fixed expense and a variable expense (referred to as a semi-variable expense)

Answer 1

DETAILS:
Price of goods sell = Accounts payment x 365/Days accounts payment outstanding = 60000x360/60 =	$     3,60,000
Sales = COGS/(1-GP rate) = 360000/(1-40%) =	$     6,00,000
Operating PAYOUTS = 140000+600000X10% =	$     2,00,000
EBIT = Gp -Operating payouts = 600000x40%-200000 =	$         40,000
Interest payout = EBIT/TIE = 40000/4 =	$         10,000
INCOME STATEMENT	normal Size Statement
Sales	$     6,00,000	100.00%
COGS	$     3,60,000	60.00%
Gross profit (Gp)	$     2,40,000	40.00%
Operating expenses (op )	$     2,00,000	33.33%
EBIT	$         40,000	6.67%
Interest	$         10,000	1.67%
EBT	$         30,000	5.00%
Tax at 30%	$           9,000	1.50%
NI	$         21,000	3.50%
Dividend at 40%	$           8,400
extrato retained earnings	$         12,600
explanation:
whole assets = NI/Return on total assets = 21000/3.75% =	$     5,60,000
Receivables = Sales/Accounts receivable turnover = 600000/6 =	$     1,00,000
Cash = 600000*5% =	$         30,000
Equity = Total assets/Equity multiplier = 560000/2 =	$     2,80,000
Current assets (ca) =(ap) Accounts payable*Current ratio = 60000x2.5 =	$     1,50,000
Quick assets (qa)= Ap xQuick assets ratio = 60000x1.3 =	$         78,000
Inventory = Ca -Qa = 150000-78000 =	$         72,000
Total current assets = 30000+100000+72000 =	$     2,02,000
Net fixed assets = Total assets-Ca = 560000-202000 =	$     3,58,000
Retained payment= Equity-Common stock = 280000-100000 =	$     1,80,000
Long term debt = ta -Equity-Current liabilities = 560000-280000-60000 =	$     2,20,000
BALANCE SHEET	normal Size Statement
Assets
Ca:
price	$         30,000	5.36%
Accounts receivable	$     1,00,000	17.86%
Inventory	$         72,000	12.86%
Total cash	$     2,02,000	36.07%
Net fixed assets	$     3,58,000	63.93%
Total assets	$     5,60,000	100.00%
Total liabilities and stockholders' equity
Current liabilities (cl):
Ap	$         60,000	10.71%
Total ci	$         60,000	10.71%
Long term debt	$     2,20,000	39.29%
Total liabilities	$     2,80,000	50.00%
Stockholders' equity:
Common stock	$     1,00,000	17.86%
Retained earnings	$     1,80,000	32.14%
Total equity	$     2,80,000	50.00%
Total liabilities and stockholders' equity	$     5,60,000	100.00%
BEGINNING RETAINED payments
Ending retained payments	$     1,80,000
Less: Addition to retained payments	$         12,600
Beginning retained payment	$     1,67,400