Introduction to Managerial Finance The following financial data are also available: (1) The firm has estimated that its sales for 2004 will be $900,000. (2) The firm expects to pay $35,000 in cash dividends in 2004. (3) The firm wishes to maintain a minimum cash balance of $30,000. (4) Accounts receivable represent approximately 18% of annual sales. (5) The firms ending inventory will change directly with changes in sales in 2004. (6) A new machine costing $42,000 will be purchased in 2004. Total depre- ciation for 2004 will be $17,000. (7) Accounts payable will change directly in response to changes in sales in 2004. (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 com- mon stock will remain unchanged. a. Prepare a pro forma income statement for the year ended December 31, 2004, using the percent-of-sales method. b. Prepare a pro forma balance sheet dated December 31, 2004, using the judg- mental approach. Red Queen Restaurants Balance Sheet December 31, 2003 Assets Liabilities and Stockholders Equity Cash $ 32,000 Accounts payable $100,000 Marketable securities 18,000 Taxes payable 20,000 Accounts receivable 150,000 Other current liabilities 5 , 0 0 0 Inventories 1 0 0 , 0 0 0 Total current liabilities $125,000 Total current assets $300,000 Long-term debt $200,000 Net fixed assets $3 5 0 , 0 0 0 Common stock $150,000 Total assets $6 5 0 , 0 0 0 Retained earnings $1 7 5 , 0 0 0 Total liabilities and stockholders equity $6 5 0 , 0 0 0 Red Queen Restaurants Income Statement for the Year Ended December 31, 2003 Sales

man pemecates and the improved in his to prepare the financial plam, roduction to Managerial Finans Roll med Gece pe TomTom M The A Metode A. Time Tape Tembam Lee BE 51 Te Ta The following financial data are who will 111 The firm has estimated that its sales for 2004 will be $900,000 21 The firm expect to pay $15,000 in cash divided in 2004 131 The firm wishes to mode of 50.000, 141 Accounts receivable representappeesitue 18 al actual sale 15) The firmelitary will change timely with angkin lexin 2004 16 new machine conting 543.2000 will be purchase is 04. Total de cate for 2004 will.000 121 Accounts palle will change directly in permeto changes in les in 181 Tas payable will requal to both of the tax liabile a the poema income 191 Marketable securities, the curreliables, deb, and.com stock will remain unchal 1. Prema income for the warm 2004, in the presidential Prepare a pro ka balance sheet dated December 31, 2004. ing the Mottal approach ction to Managerial Finance Hal Queen Intan Yared Dember 11.2001 La Costa de Gius profis Le Operating Net profits before LT10 Net Cash dividende Tointi $500,000 con 000 5300,000 100,000 $100,000 41,111 $ 60,000 2000 $10.000 Are Cal Maritable Acom Inves Tocal Nerede Total Reduces Ialance She December 31, 2003 tibilities and Schulden uit $ 12,000 5100.000 18,000 Tapah 20,000 150,000 Otislili 5,000 100,000 Total liabilities $125.000 5.300,000 Len.com dobe $200,000 5350.000 Com el 5130,000 560.000 $175.000 Tamil The following financial data are also available (1) The firm has estimated that its sales for 2004 will be $900,000 (2) The firm expects to pay $35,000 in cash dividends in 2004 (3) The firm wishes to maintain a minimum cash balance of 530,000, (4) Accounts receivable represent approximately 18% of annual sales (5) The firm's ending inventory will change directly with changes in sales in 2004. (6) A new machine costing $42,000 will be purchased in 2004. Total depre- ciation for 2004 will be $17,000. 17) Accounts payable will change directly in response to changes in sales in 2004 (8) Taxes payable will equal one-fourth of the tax liability on the pro forma income statement 19) Marketable securities, other current liabilities, long-term debt, and.com mon stock will remain unchanged. a. Prepare a pro forma income statement for the year ended December 31, 2004, using the percent-of-sales method b. Prepare a pro forma balance sheet dated December 31, 2004, using the de mental approach