XYZ Enterprise

Exercise: Based on the information given, and using percentage of sales method, prepare:
a. Proforma profit and loss account for year ending 1987.
Proforma Profit and Loss Year 1987
Year
Sales
Cost of goods sold
Gross profit
Operating expenses
Depreciation (10%)
Net profit before taxes
Taxes (40%)
Net profit after taxes
Dividend
Unappropriate profits

1986
$1,200,000
900,000
300,000
115,000
35,000
185,000
60,000
125,000
30,000
$95,000

0.7500
0.0958

1987
$1,350,000
1,012,500
337,500
129,375
43,000
165,125
66,050
99,075
60,000
$39,075

b. Proforma balance sheet ending 1987.

Proforma Balance Sheet 1987
Year
Sales
Assets:
Cash
Short term investments
Trade debtors
Stock
Total current assets
Net fixed assets
Total assets

1986
$1,200,000
25,000
75,000
200,000
150,000
450,000
350,000
$800,000

1987
$1,350,000
0.0208
0.0625
0.1250

28,125
84,375
270,000
168,750
551,250
430,000
$981,250

Liabilities and capital:

Short term borrowings
Trade creditors
Total current liabilities
Long term debt
Paid up capital
Reserve
Total liabilities and capital

60,500
120,000
180,500
200,000
225,000
194,500
$800,000

0.0504
0.1000
0.1667

c. Determine how much financing is needed.

Total assets - Total liabilities and capital = $981,250 - $886,638
= $94,613

68,063
135,000
203,063
225,000
225,000
233,575
$886,638