Module06AssignmentTemplate.xlsx
Pro Forma
| Pro Forma Income Statement and Balance Sheet |
| Below is the income statement and balance sheet for Blue Bill Corporation for 2020. Based on the historical statements and the |
| additional information provided, construct the firm's pro forma income statement and balance sheet for 2021. |
| Blue Bill Corporation |
| Income Statement |
| For the year ended 2020 |
|
|
| Projected |
|
| 2019 |
2020 |
| 2021 |
| 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 2021 from 2020 levels. |
|
|
| 5% |
| COGS and SG&A will be the average percent of sales for the last 2 years. |
|
|
|
|
| Revenues |
$123,000 |
| Depreciation expense will increase to $2,200. |
|
|
| $2,200 |
| COGS |
86,100 |
| Interest expense will be $1,900. |
|
|
| $1,900 |
| COGS % |
| The tax rate is 35%. |
|
|
| 35% |
| SG&A |
12,300 |
| Dividend payout will increase to $850. |
|
|
| $850 |
| SG&A % |
| Blue Bill Corporation |
| Balance Sheet |
| December 31, 2020 |
|
|
| Projected |
|
| 2020 |
|
| 2021 |
| Current assets |
| Cash |
$8,000 |
| Accounts receivable |
3,150 |
5.0% |
| Inventory |
9,450 |
15.0% |
| 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 liabilities |
| Accounts payable |
$3,780 |
6.0% |
| Bank loan (10%) |
3,200 |
| Other current liabilities |
1,250 |
3.0% |
| 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 10% of sales in 2021. |
|
|
| 10% |
| Working capital accounts (accounts receivable, accounts payable, and inventory) will be the same percent of sales in 2021 as they were in 2020. |
| $8,350 of new PP&E will be purchased in 2021. |
|
|
| $8,350 |
| Other current liabilities will be 3% of sales in 2021. |
|
|
| 3% |
| 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. |
Cash Budget
| Cash Budget |
| Sales for Blue Bill Corporation are projected as follows for the months of June through November: |
| June |
$200,000 |
| July |
$200,000 |
| August |
$200,000 |
| September |
$300,000 |
| October |
$500,000 |
| November |
$200,000 |
| Credit sales account for 70% of the month sales and are collected one month after the sale. |
|
|
|
|
| 70% |
30% |
| Other receipts for October are $50,000. |
|
|
|
|
| $50,000 |
| Variable disbursements are 60% of sales each month. |
|
|
|
|
| 60% |
| Fixed disbursements are $10,000 each month. |
|
|
|
|
| $10,000 |
| $80,000 should be included in August for taxes. |
|
|
|
|
| $80,000 |
| The company is obligated to make a $400,000 debt repayment in November. |
|
|
|
|
| $400,000 |
| Beginning cash in June is $50,000. |
|
|
|
|
| $50,000 |
| Desired ending cash each month is $10,000. |
|
|
|
|
| $10,000 |
| Complete the monthly cash budget for Blue Bill Corporation for June through November. |
| Blue Bill Corporation |
| Cash Budget |
|
| June |
July |
August |
September |
October |
November |
| Sales |
| Cash sales |
| Collections |
| Other Receipts |
| Total cash receipts |
| Variable disbursements |
| Fixed disbursements |
| Other disbursements |
| Total cash disbursements |
| Net change during the month |
| Beginning cash |
| Ending cash |
| Required cash |
| Excess cash to invest |
| Cash borrowed |
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