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ABC Company expects sales of Rs 24 million next year andsame among the following year Sales are spread evenly throughoutthe year On the basis of thefollowing information prepare aforecast income

ABC Company expects sales of Rs. 2.4 million next year andsame among the following year. Sales are spread evenly throughoutthe year. On the basis of thefollowing information, prepare aforecast income statement and balance sheet for yearend:

 

  • Cash: Minimum of 4 % of annual sales.
  • Accounts receivable: 60-day average collectionperiod based on annual sales.
  • Inventories: Turnover of eight times a year.
  • Net fixed assets: Rs. 500,000 now. Capital expenditureequal to depreciation.
  • Accounts payable: One month’spurchases.
  • Accrued expenses: 3% of sales.
  • Bank borrowings: Rs. 50,000 now. Can borrow up to Rs.250,000.
  • Long-term debt: Rs. 300,000 now. Payable Rs. 75,000 atyear end.
  • Common stock: Rs. 100,000. No additionsplanned.
  • Retained earnings: Rs. 500,000 now
  • Net profit margin: 8% of sales.
  • Dividends: none.
  • Cost of goods sold: 60% of sales.
  • Purchases: 50% of cost of goods sold.
  • Income taxes: 50% of before-tax profits.

 

Note: Give all the necessarycalculations.

 

 

Jun 02 2020 View more View Less

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