The balance sheet of the Emery Company is presented below:
Emery Company Balance Sheet
March 31,2010
(Millions of Dollars)

For the year ending March 31,2010,Jackson had sales of $58 million.The common stockholders receive all net earnings of the firm in the form of cash dividends,leaving no funds from earnings available to the firm for expansion (assume that depreciation expense is just equal to the cost of replacing worn-out assets).
Construct a pro forma balance sheet for March 31,2011 for an expected level of sales of $75.4 million.Assume current assets and accounts payable vary as a percent of sales,and fixed assets remain at the present level.Use notes payable as discretionary financing.

Question

The balance sheet of the Emery Company is presented below:
Emery Company Balance Sheet
March 31,2010
(Millions of Dollars)
  
For the year ending March 31,2010,Jackson had sales of $58 million.The common stockholders receive all net earnings of the firm in the form of cash dividends,leaving no funds from earnings available to the firm for expansion (assume that depreciation expense is just equal to the cost of replacing worn-out assets).
Construct a pro forma balance sheet for March 31,2011 for an expected level of sales of $75.4 million.Assume current assets and accounts payable vary as a percent of sales,and fixed assets remain at the present level.Use notes payable as discretionary financing.

Quizplus · Accepted Answer

The Answer of The balance sheet of the Emery Company is presented below:
Emery Company Balance Sheet
March 31,2010
(Millions of Dollars)
  
For the year ending March 31,2010,Jackson had sales of $58 million.The common stockholders receive all net earnings of the firm in the form of cash dividends,leaving no funds from earnings available to the firm for expansion (assume that depreciation expense is just equal to the cost of replacing worn-out assets).
Construct a pro forma balance sheet for March 31,2011 for an expected level of sales of $75.4 million.Assume current assets and accounts payable vary as a percent of sales,and fixed assets remain at the present level.Use notes payable as discretionary financing.

The Balance Sheet of the Emery Company Is Presented Below