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12 November, 12:16

Consider the following simplified financial statements for the Yoo Corporation (assuming no income taxes):

Income Statement Balance Sheet

Sales $45,700 Assets $21,900 Debt $5,900

Costs 40,100 Equity 16,000

Net income $5,600 Total $21,900 Total $21,900

The company has predicted a sales increase of 6 percent. It has predicted that every item on the balance sheet will increase by 6 percent as well.

Create the pro forma statements and reconcile them.

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  1. 12 November, 14:44
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    These are the new and reconciled statements

    Explanation:

    First, we have to design the original statements this way:

    Yoo Corporation

    Income statement

    Sales 45.700

    Costs 40.100

    Net income 5.600

    Total 45.700 45.700

    Yoo Corporation

    Financial position statement

    Assets 21.900

    Debt 5.900

    Equity 16.000

    Total 21.900 21.900

    Now we can create the new statements multiply every item by 1,06 or 106% to include the increase of 6 percent

    Yoo Corporation

    Income statement

    Sales 48.442

    Costs 42.506

    Net income 5.936

    Total 48.442 48.442

    Yoo Corporation

    Financial position statement

    Assets 23.214

    Debt 6.254

    Equity 16.960

    Total 23.214 23.214
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