Assignment

XYZ Corporation published the following financial statements at the end of the year:

Assume the following:

All discretionary accounts that are influenced by the policy decisions are identified by ** in the above financial statements. No changes
are expected in the dividend payout policy and the company does not expect to raise any new equity.

Depreciation will remain fixed for the next year.

SG&E represents $25,000 in fixed costs and the remainder of the expense varies with sales.

A payment of $5,000 is due on the long-term debt on March 31 of the next year.

All current accounts on the balance sheet, net fixed assets, and cost of goods sold are accounts that vary with sales.

The tax rate will remain unchanged for the following year.

Next years sales are forecast to be $400,000.

1. Prepare the pro forma income statement and balance sheet for the next year and answer the following questions.

2. The SG&A expense for the following year is:

$66,667
$63,320
$58,333
$33,320

3. The projected value of total asset value at the end of the following year is:

$180,000
$160,000
$145,000
$135,000

4. The projected value of retained earnings at the end of the following year is:

a. $34,000
b. $41,137
c. $44,706
d. $55,379

5. The external financing need (EFN) for the following year is:

a. $11,287
b. $22,097
c. $40,960
d. $45,000.