Solution
Khushboo answered on
Dec 05 2021
FINA 1031 term project
Instructions
Do the work IN THIS ORDER !!! Marks ConnellyNoah974362
1) Do income statements for 2019 6
2) Do Balance Sheets for 2019 6
3) Do a pro forma Income Statement for 2020 8 Note 1: The closing cash balance as per cash budget and balance sheet will not be tallied becase the assumption in monthly cash budget and balance sheet are different
4) Do a pro forma Balance Sheet for 2020 8 Note 2: In year 2019, the data balances are not matching so differential amount has been adjusted in cash balance.
5) Do Cash Flow Statement for 2019 10
6) Do ratios for 2018 2019 10
7) Do pro forma Ratios for 2020 5
8) Do a pro forma cash budget for 2020 18
9) Do
eakeven questions for 2019 2020 8
10) Do the theory problem below 20
Total 99
Theory Problem
Based on the ratios and common size calculations compare how Fanshawe Furniture is doing compared to the benchmark. Is it doing better or worse ? Be specific. This is worth 20 marks which means you should be comparing 10 sets of numbers and explaining why the numbers are different and whether they are better or worse.
Data
2019 Data
ConnellyNoah974362 2019 Other Info 2019 2018 2020
Accounts payable $ 996,499 Common Stock 400000 shares 400000 shares 400000 shares Accounts payable 996499
Accounts receivable $ 477,536 Accounts receivable 477535.749
Amortization expense $ 38,000 Amortization expense 38000
Beginning Inventory $ 760,000 Notes Payable cu
ent Beginning Inventory 760000
Cash $ 138,887 Sales on Credit 90% percent of net sales Cash 138887
Common stock $ 100,000 Common stock 100000
Ending Inventory $ 1,010,448 Share Price 2018 $ 1.60 per share Share Prices based on accounting department's estimates. Ending Inventory 1010448
Freight In $ 39,660 Share Price 2019 $ 2.75 per share Freight In 39660
Interest expense $ 63,401 Interest expense 63401
GIC's $ 300,000 The directors have decided that no new shares will be issued/sold in 2020 GIC's 300000
Mortgage payable $ 911,115 Mortgage payable 911115
Net Purchases $ 2,982,147 Net Purchases 2982147
Net Sales $ 5,226,690 Net Sales 5226690
Notes payable $ 200,000 Tax rate 40% Of Net Income Taxes on the year's profits are paid in December Notes payable 200000
Prepaid expenses $ 42,089 Amortization Expense 4% declining balance Prepaid expenses 42089
Plant and Equipment $ 3,900,000 Plant and Equipment 3900000
Salaries $ 685,188 Salaries 685187.92
Utilities $ 2,879 Utilities 2879.1
Insurance $ 2,787 Insurance 2786.64
Transport $ 20,694 Transport 20694.36
Repairs & Maintenance $ 9,585 Repairs & Maintenance 9584.55
Advertising $ 26,810 Advertising 26810.34
Misc. Expense $ 49,701 Misc. Expense 49701.26
Direct Wages and Expenses $ 1,190,500 Direct Wages and Expenses 1190500
Comon Stock Dividends $ 50,000 Comon Stock Dividends 50000
974362 974362
ConnellyNoah974362 2018 ConnellyNoah974362
Pro forma Data
2020 Projected Data
Net Sales 12% increase Mortgage payments for the year: 2019 2020 2021
Direct Wages & Expenses 11% increase Interest Principal Interest Principal Interest Principal
Salaries 3.00% increase 4,499.65 1,989.21 4,378.51 2,110.35 4,250.79 2,238.07
4,489.83 1,999.03 4,368.09 2,120.77 4,240.11 2,248.75
Utilities 2.50% increase 4,479.96 2,008.90 4,357.61 2,131.25 4,229.43 2,259.43
Insurance 3.00% increase 4,470.04 2,018.82 4,347.09 2,141.77 4,218.74 2,270.12
Transport 6.00% increase 4,460.06 2,028.80 4,336.51 2,152.35 4,208.06 2,280.80
R&M 2.00% increase 4,450.05 2,038.81 4,325.88 2,162.98 4,197.38 2,291.48
Advertising $ 4,000 decrease 4,439.98 2,048.88 4,315.20 2,173.66 4,186.70 2,302.16
Misc 2.00% decrease 4,429.86 2,059.00 4,304.46 2,184.40 4,176.01 2,312.85
Freight-in 10.00% increase 4,419.69 2,069.17 4,293.68 2,195.18 4,165.33 2,323.53
Net Purchases 10% increase 4,409.47 2,079.39 4,282.84 2,206.02 4,154.65 2,334.21
Common Stock Dividends $ 20,000 increase 4,399.20 2,089.66 4,271.94 2,216.92 4,143.96 2,344.90
Amortization Expense 4.00% declining balance 4,388.88 2,099.98 4,260.99 2,227.87 4,133.28 2,355.58
Capital purchases $ 30,000 new roof in June to be added to plant & equipment 53,336.67 24,529.65 51,842.80 26,023.52 50,304.45 27,561.87
Cash to be calculated on balance sheet
GIC's Same as 2019
Accounts receivable 12% increase
Ending Inventory 950000
Prepaid expenses Same as 2019
Accounts payable 914000
Notes payable Same as 2019
Income Tax on Profits 40%
Annual Interest on Note Payable 8% paid quarterly on the balance at the beginning of the year (ie on last year's closing balance)
Quarterly = March, June, September, Decembe
All increases effective Jan 1 2020
GIC's, Prepaids, and Notes payable need not be accounted for in cash budget
For the Cash Budget:
A/P and A/R payments are calculated as per bottom left of Cash Budget
20 per cent of your sales come in each of the following months August, September, Octobe
8% in November, and the rest of the year, the sales are divided evenly among the months
Direct wages & expenses fluctuate in the same proportion as your sales, in the same month as the sales
Your purchases and freight in fluctuate in the same proportion as your sales, BUT one month before.
Remember: The numbers you use will be unique to you based on your student number !
Dividends are paid in December, Income tax is paid in December.
Unless otherwise indicated, operating expenses are the same each month.
Income Statements
4 974362 Fanshawe Furniture Manufacturing
Comparative Income Statements
2019 2018 2020
974362
Net Sales $ 5,226,690 $ 4,321,090 $ 5,853,893
Less: Cost of Sales $ 3,961,859 $ 3,338,881 $ 4,455,443
Gross profit $ 1,264,831 $ 982,209 $ 1,398,450
Salaries $ 685,188 $ 562,752 $ 705,744
Utilities $ 2,879 $ 2,805 $ 2,951
Insurance $ 2,787 $ 2,688 $ 2,870
Transport $ 20,694 $ 19,506 $ 21,936
Repairs & Maintenance $ 9,585 $ 9,111 $ 9,776
Advertising $ 26,810 $ 26,267 $ 22,810
Misc. Expense $ 49,701 $ 46,871 $ 50,695
Amortization expense $ 38,000 $ 50,000 $ 37,080
Total...