Assume ABC Company has asked you to not only prepare their 2017 year-end Balance Sheet but to also provide pro-forma financial statements for 2018.

accounting

Description

Excel Project Instructions

Assume ABC Company has asked you to not only prepare their 2017 year-end Balance Sheet but to also provide pro-forma financial statements for 2018. In addition, they have asked you to evaluate their company based on the pro-forma statements with regard to ratios. They also want you to evaluate 3 projects they are considering. Their information is as follows:

End of the year information:

Account

12/31/17

Ending Balance

Cash

50,000

Accounts Receivable

175,000

Inventory

126,000

Equipment

480,000

Accumulated Depreciation

90,000

Accounts Payable

156,000

Short-term Notes Payable

12,000

Long-term Notes Payable

200,000

Common Stock

235,000

Retained Earnings

solve

 

Additional Information:

·         Sales for December total 10,000 units. Each month’s sales are expected to exceed the prior month’s results by 5%. The product’s selling price is $25 per unit.

·         Company policy calls for a given month’s ending inventory to equal 80% of the next month’s expected unit sales. The December 31 2017 inventory is 8,400 units, which complies with the policy. The purchase price is $15 per unit.

·         Sales representatives’ commissions are 12.5% of sales and are paid in the month of the sales. The sales manager’s monthly salary will be $3,500 in January and $4,000 per month thereafter.

·         Monthly general and administrative expenses include $8,000 administrative salaries, $5,000 depreciation, and 0.9% monthly interest on the long-term note payable.

·         The company expects 30% of sales to be for cash and the remaining 70% on credit. Receivables are collected in full in the month following the sale (none is collected in the month of sale).

·         All merchandise purchases are on credit, and no payables arise from any other transactions. One month’s purchases are fully paid in the next month.


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