| Pro Forma Income Statement and Balance Sheet |
| Below is the income statement and balance sheet for Blue Bill Corporation for 2013. Based on the historical statements and the |
| additional information provided, construct the firm's pro forma income statement and balance sheet for 2014. |
| Blue Bill Corporation |
| Income Statement |
| For the year ended 2013 | | | | Projected |
| | 2012 | 2013 | | 2014 |
| Revenue | $60,000 | $63,000 |
| Cost of goods sold | 42,000 | 44,100 |
| Gross margin | 18,000 | 18,900 |
| SG&A expense | 6,000 | 6,300 |
| Depreciation expense | 1,800 | 2,000 |
| Earnings Before Interest and Taxes (EBIT) | 10,200 | 10,600 |
| Interest expense | 1,500 | 1,800 |
| Taxable income | 8,700 | 8,800 |
| Income Tax Expense | 3,045 | 3,080 |
| Net income | 5,655 | 5,720 |
| Dividends | 750 | 800 |
| To retained earnings | $4,905 | $4,920 |
| Additional income statement information: |
| Sales will increase by 5% in 2014 from 2013 levels. |
| COGS and SG&A will be the average percent of sales for the last 2 years. |
| Depreciation expense will increase to $2,200. |
| Interest expense will be $1,900. |
| The tax rate is 35%. |
| Dividend payout will increase to $850. |
| Blue Bill Corporation |
| Balance Sheet |
| December 31, 2013 | | | | Projected |
| | 2013 | | | 2014 |
| Current assets |
| Cash | $8,000 |
| Accounts receivable | 3,150 |
| Inventory | 9,450 |
| Total current assets | 20,600 |
| Property, plant, and equipment (PP&E) | 28,500 |
| Accumulated depreciation | 16,400 |
| Net PP&E | 12,100 |
| Total assets | $32,700 |
| Current liabilites |
| Accounts payable | $3,780 |
| Bank loan (10%) | 3,200 |
| Other current liabilities | 1,250 |
| Total current liabilities | 8,230 |
| Long-term debt (12%) | 4,800 |
| Common stock | 1,250 |
| Retained earnings | 18,420 |
| Total liabilities and equity | $32,700 |
| Additional balance sheet information: |
| The minimum cash balance is 12% of sales. |
| Working capital accounts (accounts receivable, accounts payable, and inventory) will be the same percent of sales in 2014 as they were in 2013. |
| $8,350 of new PP&E will be purchased in 2014. |
| Other current liabilities will be 3% of sales in 2014. |
| There will be no changes in the common stock or long-term debt accounts. |
| The plug figure (the last number entered that makes the balance sheet balance) is bank loan. |