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Red Queen Restaurants wishes to prepare financial plans




Question;Red Queen Restaurants wishes to prepare financial plans. Use;the financial statements and the other information provided below to prepare;the financial plans. The following financial data are also available;(1) The firm has estimated that its sales for 2013 will be;$900,000.;(2) The firm expects to pay $35,000 in cash dividends in;2013.;(3) The firm wishes to maintain a minimum cash balance of;$30,000.;(4) Accounts receivable represent approximately 18% of annual;sales.;(5) The firm's ending inventory will change directly with;changes in sales in 2013.;(6) A new machine costing $42,000 will be purchased in 2013.;Total depreciation for 2013 will be $17,000.;(7) Accounts payable will change directly in response to;changes in sales in 2013.;(8) Taxes payable will equal one-fourth of the tax liability;on the pro forma income statement.;(9) Marketable securities, other current liabilities;long-term debt, and common stock wll remain unchanged.;a. Prepare a pro forma income statement for the year ended;December 31, 2013, using the percent-of-sales method.;b. Prepare a pro forma balance sheet dated December 31;2013, using the judgmental approach.;c. Analyze these statements, and discuss the resulting;external financing required.


Paper#56495 | Written in 18-Jul-2015

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