-Please refer to the spreadsheet above.Selected assumptions are given for preparing pro forma financial statements for 2015.Assume that no new equity will be issued in 2015.When the pro formas are completed,which of the following formulas would correctly give the forecast for shareholders' equity in cell G19?
A) =F19*B2
B) =F19*(1 + B2)
C) =F19 + (1 - B4)*C16
D) =F19 + B4*C16
E) None of the above.

Question

-Please refer to the spreadsheet above.Selected assumptions are given for preparing pro forma financial statements for 2015.Assume that no new equity will be issued in 2015.When the pro formas are completed,which of the following formulas would correctly give the forecast for shareholders' equity in cell G19?
A) =F19*B2 
B) =F19*(1 + B2) 
C) =F19 + (1 - B4)*C16 
D) =F19 + B4*C16 
E) None of the above.

Quizplus · Accepted Answer

The formula C) =F19 + (1 - B4)*C16 correctly calculates the forecast for shareholders' equity by adding the retained earnings (which is net income minus dividends) to the existing equity.

-Please Refer to the Spreadsheet Above