QuestionAnswered step-by-stepI have done this assignment, it is due in 12 hours I want to…I have done this assignment, it is due in 12 hours I want to confirm if it is correct. 1. Consider the following simplified financial statementIncome statement Balance sheetSales $ 39,400 Assets $ 29,200 Debt $ 9,400 Costs 34,700 Equity 19,800 Net income $ 4,700 Total $ 29,200 Total $ 29,200 The company has predicted a 15% sales increase. It has indicated that every item on the balance sheet will increase by 15%. Create the pro forma statements. What is the plug variable for balancing the balance sheet? Question 1 assumes that the company pays out 50% of net income as cash dividends to shareholders. Considering that costs and assets vary with sales, but debt and equity do not. Create the pro forma financial statements and determine the external financing needed. Consider the following income statement for the Redrum Company:Income Statement Sales $ 53,000 Costs 40,900 Taxable income $ 12,100 Taxes (22%) 2,662 Net income $ 9,438 Dividends $ 3,500 Addition to RE $ 5,938 The company projects a 20% sales growth next year. Assuming costs vary with sales and the dividend payout ratio is constant. Prepare a pro forma income statement. What is the projected addition to retained earnings (RE)? Continue question 3 above. Below is the balance sheet for the Redrum company.Balance Sheet Assets Liabilities and Owner’s Equity Current assets $ %Sales Current liabilities $ %Sales Cash $ 3,140 Accounts payable $ 2,600 Accounts Receivable 4,200 Notes payable 5,700 Inventory 6,500 Total $ 8,300 Total $ 13,840 Long-term debt $ 28,000 Fixed assets Net plant &equipment $ 43,200 Owners’ equity Common stock $ 5,000 Retained earnings 15,740 Total $ 20,740 Total liabilities and Total assets $ 57,040 Owners’ equity $ 57,040 Assuming accounts payable vary with sales but notes payable do not. Under the percentage of sales approach, fill in the two highlighted columns under “%Sales”. Use “n/a” if that account doesn’t vary with sales. Based on the information in Question 3 and 4, prepare a pro forma balance sheet showing external financing needed. Assuming a 20% sales growth next year, no new external debt or equity financing, and a constant payout ratio.AccountingBusinessManagerial AccountingFNCE 2465Share Question
