Question

The most recent financial statements for Scott, Inc., appear below. Sales for 2020 are projected to grow by 20 percent. Interest expense will remain constant; the tax rate and the dividend payout rate also will remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. SCOTT, INC. 2019 Income Statement Sales Costs Other expenses $759,000 594,000 30,000 Earnings before interest and taxes Interest expense $ 135,000 26,000 Taxable income Taxes (21%) $ 109,000 22,890 Net income $ 86,110 Dividends Addition to retained earnings $26,694 59,416

Answer 1

Calculate the EFN as follows:

A 377 378 Sales 379 Costs 380 Other expenses 381 EBIT 382 Interest 383 EBT 384 Tax 385 Net income 386 Dividend 387 Retained earnings 388 389 390 Assets 391 Current assets 392 Cash 393 Accounts receival 394 Inventory 395 Total 396 Fixed assets 397 B 2019 $759,000.00 $594,000.00 $30,000.00 $135,000.00 $26,000.00 $109,000.00 $22,890.00 $86,110.00 $26,694.00 $59,416.00 с 2020 $910,800.00 $712,800.00 $36,000.00 $162,000.00 $26,000.00 $136,000.00 $28,560.00 $107,440.00 $33,306.28 $74,133.72 2019 2019 2020 $21,840.00 $44,780.00 $103,960.00 $170,580.001 $435,000.00 Balance sheet 2020 Liabilitie and equity Current liability $26,208.00 Accounts payable $53,736.00 Note payable $124,752.00 Total $204,696.00 Long term debt $522,000.00 Common stock Retained earnings Total $726,696.00 $56,000.00 $15,200.00 $71,200.00 $142,000.00 $120,500.00 $271,880.00 $392,380.00 $605,580.00 $35,782.28 $67,200.00 $50,982.28 $118,182.28 $142,000.00 $120,500.00 $346,013.72 $466,513.72 $726,696.00 398 399 Total 400 $605,580.00 EFN

Formulas:

А B 377 2019 378 Sales 759000 379 Costs 594000 380 Other expenses 30000 381 EBIT =B378-B379-B380 382 Interest 26000 383 EBT =B381-B382 384 Tax =B383*21% 385 Net income =B383-B384 386 Dividend 26694 387 Retained earnings =B385-B386 388 389 390 Assets 2019 391 Current assets 392 Cash 21840 393 Accounts receivabl44780 394 Inventory 103960 395 Total =SUM(B392:B394) 396 Fixed assets 435000 С 2020 =B378*(1+20% =B379*(1+20%) =B380*(1+20% =C378-C379-C380 =B382 =C381-C382 =C383*21% =C383-C384 =C385*(B386/B385) =C385-C386 Balance sheet et 2020 Liabilitie and equity 2019 2020 Current liability =B392*(1+20% Accounts payable 56000 =E392*(1+20%) =B393*(1+20% Note payable 15200 =F399-F398-F395-F392 =B394*(1+20%) Total =E392+E393 =F392+F393 =SUM(C392:C394) Long term debt 142000 =E395 =B396*(1+20%) Common stock 120500 =E396 Retained earnings 271880 =E397+C387 Total =E396+E397 =F396+F397 =C395+C396 =E394+E395+E398 =C399 =F393-E393 397 398 399 Total =B395+B396 EFN 400