Question

cash                                         $300                accounts payable                     $600

            accounts receivable                   700                notes payable                             400

            inventory                                 2000                accruals                                      200

            total current assets                $3000                total current liabilities           $1,200

            net fixed assets                       5,000                long term debt                        3,000

                                                                                    common stock                            800

                                                                                    retained earnings                     3,000

                        total assets                $8,000                total claims                            $8,000

Sales last year were $8,000. The firm expects to grow 20% next year, have a profit margin of 4%, and a dividend payout of 30%. Cash, accounts receivable, inventory, accounts payable, and accruals are assumed to move spontaneously with sales. The firm is presently operating at 90% of full capacity, has a depreciation expense of $200, and can purchase new fixed assets in increments of $600 with a first year depreciation of $45.

a. Construct a proforma Balance Sheet for the company.

b. What additional funds, if any, will be needed during the period.

Answer 1

Particulars	Amount
Sales of Last Year	$ 8,000.00
Sales of Current year	$ 9,600.00
Profit	$     384.00
Dividend Payout	$     115.20
Transferred to Retained Earnings	$     268.80

Proforma Balance Sheet
Particulars	Last Year	Increase	Current Year
Cash	$     300.00	20%	$      360.00
Accounts Receivable	$     700.00	20%	$      840.00
Inventory	$ 2,000.00	20%	$   2,400.00
Total Current Assets	$ 3,000.00		$   3,600.00
Net Fixed Assets	$ 5,000.00	355	$   5,355.00
		(-200+600-45)
Total Assets	$ 8,000.00		$   8,955.00
Accounts Payable	$     600.00	20%	$      720.00
Notes Payable	$     400.00		$      400.00
Accruals	$     200.00	20%	$      240.00
Total Current Liabilities	$ 1,200.00		$   1,360.00
Long Term Debt	$ 3,000.00		$   3,000.00
Common Stock	$     800.00		$      800.00
Retained Earnings	$ 3,000.00	$ 268.80	$   3,268.80
Additional Funds Required			$      526.20
Total Claims	$ 8,000.00		$   8,955.00

Additional Funds required = $ 526.20