3. Depreciation percentage=$1,640,200/$15,411,620 = 10. 64% New Fixed Assets=$15,411,620 + $30,000,000 = $45,411,620 $45,411,620*. 1064 = $4,831,796 new depreciation Pro forma Income Statement Sales ($36,599,300*1. 12)$40,991,216 Cost of Goods Sold ($26,669,496*1. 12) 29,869,836 Other Expenses ($4,641,000*1. 12) 5,197,920 Depreciation 4,831,796 EBIT 1,091,664 Interest 573,200 Taxable Income 518,464 Taxes (40%) 207,386 Net Income $311,078 Dividends ($311,0786*0. 30)$93,323
Add to Retained Earnings $217,755 Pro forma Balance Sheet AssetsLiabilities and Stockholder’s Equity Current AssetsCurrent Liabilities Cash ($396,900*1. 12)$444,528 Accounts Payable ($844,550*1. 12) $945,896 Accounts Receivable ($637,560*1. 12) 714,067 Notes Payable 1,928,500 Inventory ($933,400*1. 12)1,045,408Total Current Liabilities 2,874,396 Total Current Assets $2,204,003Long-term Debt $5,050,000 Fixed Assets Net Plant and Stockholder’s Equity
Equipment $45,411,620 Common Stock $322,500 Retained Earnings 9,451,685 Total Equity $9,774,185 Total Assets $47,615,623 Total Liabilities and Stockholder’s Equity $17,698,581 EFN=$47,615,623-$17,698,581 = $29,917,042 Since the fixed assets have increased at a faster percentage than sales, capacity utilization for next year will decrease because the addition of the new line would expand capacity much more than would normally be required.
