The company is planning to open another location in 2018. Using the Preliminary Statements as a base, prepare pro forma (budgeted) financials for 2018 for the new location using the following information:
Cost of leasing commercial space: $1,500 per month. |
Cost of new equipment: $15,000, purchased with a long-term note. Use straight line depreciation assuming a seven-year life, no residual value. Use full year’s depreciation for the first year. Equipment purchase was financed with a long-term note. |
Cost of hiring and training new employees: three at $25,000 each for the first year. |
Except as noted in 1, 2, 3, and 5, assets, current liabilities, sales, costs, and expenses are expected to be 80% of the existing store (from preliminary statements) except no stock. Retained earnings = net income. |
Cash: $7,000. Accounts receivable amount to 4.0 turns (accounts receivable turnover will be 4.0); inventory amount to show 3.0 turns (inventory turnover will be 3.0). No stock will be issued. Retained earnings are to equal net income. Additional financing of $5,000 will be long-term. Add remaining amount needed to balance into accounts payable. |
Preliminary | ||||||||||
Peyton Approved | ||||||||||
Balance Sheet | ||||||||||
As of December 31, 2017 | ||||||||||
Assets | Liabilities and Owners' Equity | |||||||||
Current Assets: | Current Liabilities: | |||||||||
Cash | 67,520.04 | Accounts Payable | 20,262.11 | |||||||
Accounts Receivable | 68,519.91 | Wages Payable | 3,383.28 | |||||||
Baking Supplies | 15,506.70 | Interest Payable | 211.46 | |||||||
Merchandise Inventory | 1,238.07 | |||||||||
Prepaid Rent | 2,114.55 | |||||||||
Prepaid Insurance | 2,114.55 | |||||||||
Misc. Supplies | 170.49 | |||||||||
Total Current Assets | 157184.31 | Total Current Liabilities | 23,856.85 | |||||||
Long Term Liabilities: | ||||||||||
Long Term/Fixed Assets: | Notes Payable | 5,000.00 | ||||||||
Baking Equipment | 14,000.00 | Total Long Term Liabilities: | 5,000.00 | |||||||
Accumulated Depreciation | -1,606.44 | |||||||||
Net Fixed assets | 12393.56 | Total Liabilities: | 28,856.85 | |||||||
Common Stock | 20,000.00 | |||||||||
Retained Earnings | 120,721.02 | |||||||||
Total Equity | 140,721.02 | |||||||||
Total Assets: | 169577.87 | Total Liabilities & Equity | 169,577.87 | |||||||
Peyton Approved | ||||||
Income Statement | ||||||
For Year Ended 12/31/2017 | ||||||
Bakery Sales | $ 327,322.55 | |||||
Merchandise Sales | 1,205.64 | |||||
Total Revenues | 328,528.19 | |||||
Cost of Goods Sold - Baked | 105,834.29 | |||||
Cost of Goods Sold - Merchandise | 859.77 | |||||
Total Cost of Goods Sold | 106,694.06 | |||||
Gross Profit | 221,834.13 | |||||
Operating Expenses: | ||||||
Rent Expense | 24,549.19 | |||||
Wages Expense | 10,670.72 | |||||
Misc. Supplies Expense | 3,000.46 | |||||
Business License Expense | 2,045.77 | |||||
Misc. Expense | 1,363.84 | |||||
Depreciation Expense | 677.86 | |||||
Insurance Expense | 1,091.08 | |||||
Advertising Expense | 1,549.74 | |||||
Interest Expense | 818.31 | |||||
Telephone Expense | 490.98 | |||||
Total Operating Expenses: | 46,257.95 | |||||
Net Income | 175,576.18 | |||||
Performa for INCOME STATEMENT - 2018 (Budgeted)
Sales - Bakery Sales - Merchandise Sales |
261858.04 964.512 |
Total Revenue | 262822.552 |
Cost of Goods Sold - Bakery -Merchandise |
84667.432 687.816 |
Total Cost of Goods Sold | 85355.248 |
Gross Profit ( Revenue- Cost of Goods Sold) | 177467.304 |
Operating Expenses:- - Lease Expenses ($1500*12) -- Depreciation Expenses ( cost of equipment/life of equipment)- (15000/7) -Training & Hiring Expenses of employees ( 25000*3) -Wages Expense (10670.72* 80%) - Misc. Supplies Expense (3000.46*80%) -Business License Expense (2045.77*80%) - Misc. Expense (1363.84 *80%) - Insurance Expense (1091.08 *80%) - Advertising Expense (1549.74*80%) - Interest Expense - Telephone Expense (490.98*80%) |
18000 2142.86 75000 8536.576 2400.368 1636.616 1091.072 872.864 1270.78 818.31 392.784 |
Total Operating Expenses | 112162.23 |
Net Income ( Gross Profit - Total Operating Expenses) | 65305.074 |
Notes :-
1) Loss on disposal of equipment is treated as Abnormal Loss, so it is not considered in the budgeted income statement.
2) Sales and Cost of goods sold are taken at 80% of the previous year (2017) amounts.
3) Rent and Depreciation Expenses are not taken at 80% of the previous year balances as they have provided as with exact figures of the same in the question.
4) since long term finances are of same amount as previous year (i.e. $5000) so we have taken interest expense at 100% value instead of 80% of previous year amount.
PROFORMA OF BALANCE SHEET - 2018 ( Budgeted)
ASSETS:- | LIABILITIES:- | |||||
Current Assets- | Account Payable ( Balancing Figure ) | 85418.268 | ||||
Cash | 7000 | other Payable | 3674.992 | |||
Account Receivable | 65705.638 | |||||
Baking supplies | 87286.01 | |||||
merchandise Inventory | 321.504 | |||||
prepaid Insurance (2114.55*80%) | 1691.64 | Total Current Liabilities | 89093.26 | |||
Misc Supplies (170.49*80%) | 136.392 | |||||
Other Receivables ( 700*80%) | 560 | Long Term Liabilities | ||||
Consignment Inventory (200*80%) | -160 | Note Payables | 5000 | |||
Total Current Assets | 162541.187 | Total Long term Liabilities | 5000 | |||
Common Stock | 16000 | |||||
Fixed Assets (15000-2142.85) | 12857.15 | Retain Earning | 65305.074 | |||
Total Assts | 175398.337 | Total Liabilities | 175398.337 |
Notes :-
1) Account Receivable calculation
Account receivable turnover = 4.0 ( turnover/ account receivable)
account receivable= 262822.552/4 = 65705.638
2) Inventory Calculation
Inventory Turnover = 3.0 (given)
Bakery Supplies = bakery turnover/bakery inventory
=261858.04/3 = 87286.01
Merchandise Inventory = Merchandise turnover/ merchandise inventory
=964.512/3 = 321.501
3) other payables ( liabilities ) include wages payable, interest payable and customer deposit at 80% of previous year balances
Can someone help!? I do not understand how to create a ProForma income statement or balance staement for 2018?
Overview: You just began a position as a financial accountant at Peyton Approved. In this role, your first task is to prepare the company’s financials for the year-end audit. Additionally, the company is interested in expanding its business within the next year. They would like your support in assessing their ability to meet their goals. Refer to the data below and use the Final Project Workbook that includes the income statement, balance sheet, retained earnings statement and cash flow statement...
Complete the “Closing Entries” tab in your workbook by closing all temporary income statement amounts to create closing entries. Prepare the “Post Closing Trial Balance” tab for the next accounting period. Adjusting entries Debit Credit Peyton Approved Trial Balance 2018 Unadjusted trial balance Debit Credit 32,236.75 18,500.00 175.65 1,500.00 2,400.00 6,000.00 17,400.00 400.00 250.00 550.00 600.00 7,700.00 10,000.00 150.00 5,000.00 480.00 16,000.00 Account Cash Baking Supplies Merchandise Inventory (FIFO) Prepaid Rent Prepaid Insurance Baking Equipment Accumulated Depreciation Office Supplies...
You just began a position as a financial accountant at Peyton Approved. In this role, your first task is to prepare the company’s financials for the year-end audit. Additionally, the company is interested in expanding its business within the next year. They would like your support in assessing their ability to meet their goals. ITEMS TO COMPLETE FOR THIS MILESTONE (Blue Tabs): GENERAL You just began a position as a financial accountant at Peyton Approved. In this role, your first...
need help balancing the statement of cash flow 2- me ) = Insert Page Layout Formulas Data Final Milestone - Review View Ariel - 12 - - A - / U - - A ormat Painter ard Wrap Test Merge & Center S. . 1 Conditional Format Formatting Table Normal Check Cell . Font Alignment Warning Automatic update of links has been disabled Options - Peyton Approved Peyton Approved Balance Sheet As of December 31, 2017 Assets Current Assets: Cash...
I received an answer on my Cadh Flow problem. the answer that I received was Equipment was (5300). i was reading the answer and I was confused. It said that the opening balance for Equipment was $8,000. That was the closing balance for 2016. In 2017 their was a purchase of $6,000 making the opening balance for 2017 as $14,000. There was a loss of equipment for $2,000. Accumulated Dep. for $1.200, Other Receivable -Insurance $700 from the insurance which...
Create financial statements by properly employing prescribed methods in accordance with generally accepted accounting principles: A. Step Eight: Prepare the financial statements. Note that you must use your adjusted trial balance to prepare the income statement, statement of owner’s equity, and balance sheet. You must complete these statements in this order, as there are interdependencies among them. Adjusting entries Debit Credit Peyton Approved Trial Balance 2018 Unadjusted trial balance Debit Credit 32,236.75 18,500.00 175.65 1,500.00 2,400.00 6,000.00 17,400.00 400.00 250.00...
Southern New Hampshire University ACC 308 - Intermediate Accounting II INSTRUCTIONS FOR MILESTONE 1 (Due Module 3) IMPORTANT NOTE: Make sure to completely review the Rubric for Milestone 1 Use the data from this Milestone and begin working on your final presentation due in Final Project (Module ITEMS TO COMPLETE FOR THIS MILESTONE (Blue Tabs): GENERAL You just began a position as a financial accountant at Peyton Approved. In this role, your first task is to prepare 1 for the...
Prepare the income statement from the trial balance below. Adjusting entries Debit Credit Peyton Approved Trial Balance 2018 Unadjusted trial balance Debit Credit 32,236.75 18,500.00 175.65 1,500.00 2,400.00 6,000.00 17,400.00 400.00 250.00 550.00 600.00 7,700.00 10,000.00 150.00 5,000.00 480.00 16,000.00 Account Cash Baking Supplies Merchandise Inventory (FIFO) Prepaid Rent Prepaid Insurance Baking Equipment Accumulated Depreciation Office Supplies Accounts Receivable Notes Payable Interest Payable Accounts Payable Wages Payable Common Stock Dividends Bakery Sales Merchandise Sales Baking Supplies Expense Rent Expense Interest...
Final adjusting entries have not yet been made. Using the terms and asset accounts, such as "Merchandise inventory" and "Consignment inventory", can anybody help me determine how to interpret the above word problem in order to make a correct adjusting journal entry below in the general journal? What should be the proper explanation to describe what is being highlighted in the word problem below? 1. At 12/31/17, Peyton has $200 worth of merchandise on consignment at Bruno’s House of Bacon....
can someone please help me The 2018 income statement and comparative balance sheet of Granite Rock, Inc. follow: (Click the icon to view the income statement.) B (Clicly the icon to view the comparative balance sheet.) $ 108,500 Granite Rock, Inc. Statement of Cash Flows Year Ended December 31, 2018 Cash Flows from Operating Activities: Net Income Adjustments to Reconcile Net Income to Net Cash Provided by (Used for) Operating Activities: Depreciation Expense-Plant Assets Increase in Accounts Receivable Decrease in...