Question

S04-02 Pro Forma Statements and EFN (LO1, 2] Consider the following simplified financial statements for the Wims Corporation (assuming no income taxes) Income Statement Balance Sheet Sales Costs $38,000 Assets $27,300 Debt $6,700 Equity 20,600 32,600 Net income 5,400 Total $27,300 Total $27,300 The company has predicted a sales increase of 15 percent. Assume Wims pays 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.) Pro forma income statement Pro forma balance sheet Assets Sales Costs Net income Debt Ul Total Total Determine the external financing needed. (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.) External financing needed

Answer 1

1 Pro forma income statement 2 Sales 3 Costs 4 5 Net income Pro forma balance sheet $43,700 S 37,490 Assets $31,395 Debt $ 6,700 Equity $23,705 6,210Tota 31,395 Total $30,405 External financing needed $990 8 Total assets - Total liabilities and equity)

1 Pro forma income statemern 2 Sales 3 Costs 4 5 Net income +B2-B3 Pro forma balance sheet 38000*1.15 32600*1.15 Assets 27300 1.15Debt 6700 Equity 20600+6210*0.5 Total SUM(E2:E4) Total SuM(G2:G4) 7 External financing needed -E5-G5 8 Total assets - Total liabilities and equity)