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problem: You have been asked to help the Nero Violin Company [The firm motto is "There will be a hot time in the old town tonight!"] plan for the year 2010. Nero's end-of-year balance sheet for 2009 is given below:

Balance Sheet - December 31, 2009

Cash

$100

Accounts payable

$500

Marketable securities

200

Bank notes payable

300

Accounts receivable

400

Bonds payable

400

Inventories

500

Common stock

1,000

Plant, net

1,600

Retained earnings

600

Total Assets

$2,800

Total L+E

$2,800

Sales in 2009 were $4,000; 2010 sales are forecast to be 4,400 dollar. The company has a net profit margin of 9 percent & pays one-third of its earnings after taxes as dividends. The marketable securities account is used to accumulate funds for acquisitions. Since the firm is operating at full capacity, it anticipates that plant will increase proportionally with increased sales. All of the bank notes payable and $50 of the bonds payable must be repaid in 2010.

Required; 
Forecast the company's December 31, 2010 pro-forma balance sheet. Identify external financing need (EFN) or excess cash generated.

Cost Accounting, Accounting

  • Category:- Cost Accounting
  • Reference No.:- M922447

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