fm14 9 - 360,000 0.10 396,000 396,000 Inventories 720,000...

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Answers and Solutions: 14 - 9 14-9 a. & b. Garlington Technologies Inc. Pro Forma Income Statement December 31, 2008 Forecast 2007 Basis Additions 2008 Sales $3,600,000 1.10 × Sales 07 $3,960,000 Operating costs 3,279,720 0.911 × Sales 08 3,607,692 EBIT $ 320,280 $ 352,308 Interest 18,280 0.13 × Debt 07 20,280 EBT $ 302,000 $ 332,028 Taxes (40%) 120,800 132,811 Net income $ 181,200 $ 199,217 Dividends: $ 108,000 Set by management $ 112,000 Addition to RE: $ 73,200 $ 87,217 Garlington Technologies Inc. Pro Forma Balance Statement December 31, 2008 Forecast Basis % AFN With AFN 2007 2008 Sales Additions 2008 Effects 2008 Cash $ 180,000 0.05 $ 198,000 $ 198,000 Receivables
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Unformatted text preview: 360,000 0.10 396,000 396,000 Inventories 720,000 0.20 792,000 792,000 Total current assets $1,260,000 $1,386,000 $1,386,000 Fixed assets 1,440,000 0.40 1,584,000 1,584,000 Total assets $2,700,000 $2,970,000 $2,970,000 Accounts payable $ 360,000 0.10 $ 396,000 $ 396,000 Notes payable 156,000 156,000 +128,783 284,783 Accruals 180,000 0.05 198,000 198,000 Total current liabilities $ 696,000 $ 750,000 $ 878,783 Common stock 1,800,000 1,800,000 1,800,000 Retained earnings 204,000 87,217* 291,217 291,217 Total liab. and equity $2,700,000 $2,841,217 $2,970,000 AFN = $ 128,783 Cumulative AFN = $ 128,783 *See income statement....
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