to prepare the financial plans The following financial data

to prepare the financial plans. The following financial data are also available Integrative-Pro forma statements Red Queen Restaurants wishes to prepare financial plans. Use the financial statements and the other information provided here (1) The firm has estimated that its sales for 2016 will be 5900,200 (2) The firm expects to pay $35,600 in cash dividends in 2016 (3) The firm wishes to maintain a minimum cash balance of 530,000 (4) Accounts receivable represent approximately 18% at annual sales (5) The firm\'s ending inventory will change directly with changes in sales in 2016. (6) A new machine costing 543,000 will be purchased in 2016 Total depreciation for 2016 will be 516,500 (7) Accounts payable will change directly in response to changes in sales in 2016 (8) Taxes payable will equal one-fourth of the tax liability on the pro forma income statement (9) Marketable securitles, other current llablites, long-tenm debt, and common stock wll remain unchanged. a. Prepare a pro forma income statement for the year ended Decamber 31, 2016, using the percent-of-sales method b. Prepare a pro forma balance sheet dated December 31, 2016, using the judgmental spprosch. c. Analyze these stataments, and discuss the resulting exfamal financing required a. Prepare a pro forma income statement for the ar ened Decamber 31, 2016, using the percentof-salss method Complete the pro forma income statement for the year ended December 31, 2016 below: Round to the nearest dollar. Round the percentage of sales to four decimal places.) Pro Forma Income Statement Red Queen Restaurants for the Year Ended December 31, 2016 (percent-of sales method) Sales Less: Cost of goods sold Gross profits Less: Operating expenses Net profits before taxes Less Taxes (rate-40% Net profits after taxes Less: Cash dividends To Retained eamings

Solution

Pro Forma Income Statement Red Qeen Restaurents For the year Ended December 31 2016 Sales 900200 Less Cost of Goods sold 676614 75.1626% Gross Profit 223586 Less Operating Expense 112356 12.4812% Net Profit Before Taxes 111230 Less Taxes 44492 Net Profit After Taxes 66738 Less Cash Dividend 35600 To Retainned Earrnings 31138