Question

Problem 4-2 Pro Forma Statements and EFN (LO1, 2] Consider the following simplified financial statements for the Wims Corporation (assuming no income taxes): Income Statement Sales $38,800 Costs 33,120 Assets Balance Sheet $25,400 Debt Equity $ 6,400 19,000 Net income $ 5,680 Total $25,400 Total $25,400 The company has predicted a sales increase of 12 percent. Assume the company Days out half of net income in the form of a cash dividend. Costs and assets vary with sales but debt and equity do not Prepare the pro forma statements. (Input all amounts as positive values. Do not round intermediate calculations and round your answers to the nearest whole dollar amount.) Assets S $ Pro forma income statement Sales S 43,456 Costs 37,094 Net income S 6 ,362 Pro forma balance sheet 28,448 Debt Equity 28,448 Total 6,400 22,181 28,581 Total $ $

Answer 1

Pro forma income statement
Sales	$43,456	38800*1.12
Costs	$37,094	33120*1.12
Net income	$6,362
Dividend paid	$3,181
Addition to equity	$3,181
Pro forma balance sheet
Pro forma balance sheet
Assets (25,400*1.12)	28448	Debt	6400
		Equity	22181	19000+3181
Total	28448	Total	28581
External financing needed	28448-28581
External financing needed	-$133