Question

b. Discuss the financing changes suggested by the statement pre Integrative: Pro form cial plans. Use the financial statements and prepare the financial plans. P4-20 a statements Red Queen Restaurants wishes to prepare finan the other information provided below to The following financial data are also available: (1) The firm has estimated that its sales for 2020 will be $900,000. (2) The firm expects to pay $35,000 in cash dividends in 2020. (3) The firm wishes to maintain a minimum cash balance of $30,000. (4) Accounts receivable represent approximately 18% of annual sales. (5) The firm's ending inventory will change directly with changes in sales in 2020 (6) A new machine costing $42,000 will be purchased in 2020. Total depreciation for 2020 will be $17,000. (7) Accounts payable will change directly in response to changes in sales in 2020. (8) Taxes payable will equal one-fourth of the tax liability on the pro forma income statement (9) Marketable securities, other current liabilities, long-term debt, and common a. Prepare a pro forma income statement for the year ended December 31, 2020, b. Prepare a pro forma balance sheet dated December 31, 2020, using the judgmen- c. Analyze these statements, and discuss the resulting external financing stock will remain unchanged. using the percent-of-sales method. tal approach. required.

Answer 1

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