Homework Answers
Answer:
Correct answer is:
a. Liability plug
Explanation:
First pro forma year:
Projected assets = 100 * (1 + 28%) = $128
Projected liabilities and owners' equity = 100 * (1 + 22%) = $122
So we find Projected liabilities and owners' equity are lesser than Projected assets by (128 - 122=) $6 and a liability plug of $6 is required.
Had the 'projected liabilities and owners' equity' been higher than 'projected assets', then cash plug would have been required.
Option a is correct and other options b and c are incorrect.
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Sales for 2018 are projected to grow by 30 percent. Interest
expense will remain constant; the tax rate and the dividend payout
rate will also remain constant. Costs, other expenses, current
assets, and accounts payable increase spontaneously with sales.
****What is the EFN? (Do not round
intermediate calculations. A negative answer should be indicated by
a minus sign.)
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The most recent financial statements for Crosby, Inc., follow. Sales for 2018 are projected to grow by 20 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, and accounts payable increase spontaneously with sales. CROSBY, INC. 2017 Income Statement Sales Costs Other expenses $750,000 585,000 21,000 Earnings before interest $144,000 17000 127,000 and taxes Interest paid Taxable income Taxes (2296) 27,940 Net income 99,060 29,718 Dividends...
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The most recent financial statements for Crosby, Inc., follow.
Sales for 2018 are projected to grow by 30 percent. Interest
expense will remain constant; the tax rate and the dividend payout
rate will also remain constant. Costs, other expenses, current
assets, and accounts payable increase spontaneously with sales.
****What is the EFN? (Do not round
intermediate calculations. A negative answer should be indicated by
a minus sign.)
CROSBY, INC. 2017 Income Statement Sales Costs Other expenses $746,000 581,000 17,000 Earnings...
The most recent financial statements for Crosby, Inc., follow. Sales for 2018 are projected to grow by 20 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, and accounts payable increase spontaneously with sales. CROSBY, INC. 2017 Income Statement Sales Costs Other expenses $750,000 585,000 21,000 Earnings before interest $144,000 17000 127,000 and taxes Interest paid Taxable income Taxes (2296) 27,940 Net income 99,060 29,718 Dividends...
The most recent financial statements for Crosby, Inc., follow. Sales for 2018 are projected to grow by 30 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, and accounts payable increase spontaneously with sales. CROSBY, INC. 2017 Income Statement Sales Costs Other expenses $752,000 587,000 23,000 Earnings before interest and taxes Interest paid $ 142,000 19,000 Taxable income Taxes (24%) $ 123,000 29.520 Net Income $...
The most recent financial statements for Crosby Inc., follow. Sales for 2018 are projected to grow by 20 percent. Interest expense will remain constant; the tax rate and the ayout rate will also remain constant. Costs, other expenses, current assets and accounts payable increase spontaneously with sales. CROSBY, INC. 2017 Income Statement Sales Costs Other expenses $759.000 594,000 30,000 Earnings before interest and taxes Interest paid $135,000 26,000 Taxable income Taxes (21%) $109,000 22,890 Net income $86,110 Dividends Addition to...
Pro forma balance sheet. Next year, National Beverage Company will increase its plant, property, and equipment by $4,038,000 with a plant expansion. The inventories will grow by 30%, accounts receivable will grow by 25%, and marketable securities will be reduced by 47% 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...
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