## Question

###### Net Addition to Plant & Equipment; 50.00 Life of New Equipment in Years: 10 New Depreciation...

Net Addition to Plant & Equipment; 50.00

Life of New Equipment in Years: 10

New Depreciation (Straight Line): 5.00

PIE Pro-forma Income Statement For the Year Ended Dec. 31, 2016 2017* 2016 2015 Sales Cost of Goods Sold Gross Profit Selling and G&A Expenses Fixed Expenses Depreciation Expense EBIT Interest Expense Earnings Before Taxes Taxes Net Income 5,104.003,850.00 3,432.00 4,283.93 3,250.00 2,864.00 84.42% 83.45% 83.93% EXAMPLE 820.07 600.00 568.00 330.30240.00 100.00 18.90 149.70 209.10 62.50 73.70 146.60 58.64 87.96 100.00 20.00 Using the Percent-of-Sales Method from page 108 complete the Proforma Income Statement and Balance Sheet PIE plans on purchasing a $50,000 piece of equipment. Does this cause a problem with the Balance Sheet. How could we fix it? 76.00 29.48 44.22 Forecast Notes: Tax Rate Additional Depreciation Interest Rate 40% 5.00 40%

Pro-forma Balance Sheet As of Dec. 31, 2016 2015 57.60 402.00351.20 836.00715.20 1,290.001,124.00 527.00 491.00 146.20 60.80344.80 1,650.801,468.80 0.00 145.60 225.00200.00 136.00 540.20 481.60 323.43 805.03 460.00 225.99203.77 663.77 1,650.801,468.80 ssets 2017* 2016 Cash and Equivalents Accounts Receivable Invent 52.00 Total Current Assets Plant & Equipment Accumulated Depreciation 166.20 Net Fixed Assets Total Assets Liabilities and Owner's E 0.00 Accounts Payable Short-term Notes Payable Other Current Liabilities 175.20 140.00 Total Current Liabilities Long-term Debt 424.61 964.81 460.00 Total Liabilities Common Stock Retained Earnings Total Shareholder's Equity Total Liabilities and Owner's Equity 685.99

## Answers

P

PIE PI E fa。.. dern a Statement Income Fer the year ended Dec31, 2016 artcularS Sales 5104 0 3 85o co ost f ceds sold 428 3 93 3a 5o oo Gross Roit 8 20 07 60o oo 33 so o Fixed epense Depreciation nterest espese7 76.00 76O Earning Ta x es rere S IS 73.70 befo Taxes Net Income 「108-691 4.2.2 1g53%。 ted 510 ( Sellin rd (r A expense not varty as per Sal es al les) ơn expense inot ar akidnS attoniforna Balance sheet As od Dec 3, 2ot6 Sa les Cash A ccounts Inventor es-941 52 52-Kleo 1-35% - receivabie 53 aseets Plant Eeyuinment derreciastion Assets So to Fved uret reciahon B.O 2096.8 gales toi es2617 s0y Sales ear 2017又32.26 | 中7520 |存175.200m 3850 Notes as able Other curet 14 00140 co 424,61 + ghe et tous ch is the COimon Stock Retained earning 3349 2a s THO shareholdets子94-99 | 68S,99 ム60 | 60 , 001 aditional red ncun o 80 廾 Accounts payable is 4.ssソ·의 s104 (salu. /b 4 Notes payabteoter current liabilises o Relained rie is 2lo8 curr 20 oill not au oill not oy fosn cok will also nof vacy loith sales ear 20 ed incoNe宋 &子9.09 is &ternal Finance Requiped to r the usinessPIE Fer the vear ended Dec 31, 2016 Particulors Sales 8 016 5104 0ol 385o 0o Cost of acods sold 4283.93 3a So o0 33o so Selling and 6 A Fixed erpense oo1oo o0 Dep reciaHon 2s 00 nterest erpense 600 76 oo redore 13-S 1370 72 469 48 168 69 .22 Earni Ta es Tases Net Income Sales) not ras par sales Fi expense ond p ychange on te on acour ition e iade to Fixed Interest Esense will not vary assumed o.s some as revious car Tax is calculated at 서。 , 181, -2 ,46 eed

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