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    Q & R Manufacturing - Income Statement & Balance Sheet

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    You have recently been hired as Q & R Manufacturing's chief financial officer (CFO) by the firm's chief
    executive officer (CEO). The CEO tells you that in the past, a lack of financial planning has frequently
    caused the firm to have to rush out and get outside funding by either borrowing money (selling bonds)
    or selling stock. He wants to avoid this going forward and has asked you to develop a plan (beginning with
    this year's projected income statement) that will let him know ahead of time if external funds will need to
    be raised to carry out next year's plans and budget.
    Determine whether there will be an excess of funds or required new external funding needed for
    next year, given the information below for Q & R Manufacturing.
    Projected year-end income statement and balance sheets for the current 20XX0 year are as follows
    Q & R Manufacturing Income Statement
    20XX0 [projected]
    Sales $100,000 100%
    Cost of goods sold (COGS) $75,000 75%
    Gross profit $25,000 25%
    selling expenses $(15,000) -15%
    administrative exp. $(1,000) -1%
    marketing expenses $(2,000) -2%
    Profit $7,000 7%

    Q & R Manufacturing Balance Sheet
    12/31/20XX0 [projected]
    Assets Amount Liabilities + Stockholder's Equity Amount
    Cash $30,000 Accounts Payable $15,000
    Accounts Receivable $60,000 Bonds Payable $50,000
    Inventory $50,000 Common Stock $113,000
    Equipment $20,000 Retained Earnings $22,000
    Buildings $40,000
    $200,000 $200,000

    Assumptions: Sales next year (20XX1) are forecasted to increase 30%.

    Create an income statement (pro forma) and balance sheet (pro forma). Each pro forma
    should have the same information given in the financial statements above

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    Solution Summary

    The solution creates an income statement (pro forma) and balance sheet (pro forma).