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The accounts related to the Balance Sheet as well as Income Statement for a company are given below as of Dec 31s 2017. Company Y does not distribute any dividends and had no depreciation in 2017 Accounts in $ Sales Common Stock Cost of Goods Sold Accumulated Retained Earnings Interest Long Term Debt Taxes Notes Payable Net Fixed Assets Accounts Payable 2017 2,000 1,776 1.400 224 320 3,200 56 200 3,600 600 1,200 880 320 Cash Anticipating the economic recovery and increased demand, company would like to grow 10% per year in the following two years. In 2017, company was operating 10 % below capacity, that is, in 2018, sales can be increased without having to increase assets. Here is what the company is planning for 2018 and 2019: 2018: No dividends will be distributed, no stock sale or purchase will take place. All assets stay as before, accounts payable increases by 10%. COGs increases at the same rate as sales, interest, tax rate, and NWC stay the same. 2019: No dividends will be distributed, no stock sales or purchase. - Assets, accounts payable, COGS increase at the same rate as sales. Interest, tax rate, and NWC stay the same. Produce companys Income Statements and Balance Sheets for 2018 and 2019

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Answer #1

Please refer to below spreadsheet for Balance sheet and Income Statement.

Xf128+134 2017 $ 2,000 5 1,776 5 1,400 Income Statement 3 sales 4 common stock 5 Cost of goods sold 6 Acc. Retained Earnings 7 Interest 8 Long tem debt 9 Taxes 10 Notes Payable 11 Net Fixed Assets 12 Accounts Payable 13 Invento 14 Accounts Receivables 15 cash 2009 $ 2,000 S 2,200 2,420 Revenue Operationg Expenses EBIT Interest EBT Tax EAT 1,400 1,540 1,694 726 320 320 $ $ 3,200 406 272 $ $ 3,600 $ 1,200 $ 320 Balance Sheet $ 1,776 S 2,000 S 3,200 $ 1,776 S 1,776 821 2,272 2,597 Common Stock Accumulated Retained Earnings 17 Other Information 2018 Non-current Liabilitities 3,200 3,200 19 Increase in Sales 20 Increase in COGS 21 Accounts Payable increase 22 NW 23 Long Term Debt Current Liabilities 200 $ 600 same Notes Payable 200 $ 926 6,723 2019 Total Equit & Liabilities 6,000 $ 6,332 $ 25 Increase in Sales 26 Increase in COGS 27 Accounts Payable increase 28 Increase in Assets 29 NWC 30 10% 10% 10% Non-current Assets Net Fixed Assets 3,600 3960 same Current Assets Inventory Accounts Receivable Cash working Note- $ 1,200 S 320 $ 6,000 $ 1,200 1,200 32 1. It is Assumed that all sales are in cas 33 2. Cash Balance 2018 Closing Balance 34 2017Increase in Accounts 35 payable EAT) 683 2,732 $ 2,763 6,332 6,723 2,400 Total Assets 3. Cash Balance 2019 (Closing Balance 2018+Increase in Acconts payable+EAT 36 Assets purchased)

Formula Reference-

icH33 (123-H23)+110-(128-H28) Accounts Income Statement 3 sales 4 common stock 5 Cost of goods sold 6 Acc. Retained Earnings 7 Interest 8 Long tem debt 9 Taxes 10 Notes Payable 11 Net Fixed Assets 12 Accounts Payable 13 Inven 14 Accounts Receivables 15 cash 16 17 Other Information 18 2018 19 Increase in Sales 20 Increase in COGS 21 Accounts Payable increase 22 NW 23 24 2019 25 Increase in Sales 26 Increase in COGS 27 Accounts Payable increase 28 Increase in Assets 29 NWC 30 2000 2007 Revenue Operationg Expenses EBIT Interest EBT Tax EAT -83 -G4-G5 -G6-G7 -G4 (1+819 G5(1+820) -H4-H5 H4*(1+B19) H5 (1+B20 1400 224 -H7 3200 56 -H6-H7 -16-17 -G8-G9 -H8-H9 l-18-19 3600 600 Balance Sheet 2007 UI Common Stock Accumulated Retained Earnings -G15 -G16+H10 H15+H16 -H15 -H16+110 -115+116 -G15+G16 Non-current Liabilitities Long Term Debt G19 Current Liabilities Notes Payable B10 -B12 -SUM(G22:G23)-SUM(H22:H23) -G17+G19+G24 H17+H19+H24 G22 -G23 (1+B21) -H22 -H23 (1+B27) -SUM(I22:123 -117+119+124 same Total Equit & Liabilities Non-current Assets Net Fixed Assets B11 -G28 H28*(1+828) same Current Assets B13 B14 815 -SUM(G31:G33)-SUM(H31:H33) -G28+G34 working Note- -G31 H31 Accounts Receivable Cash 32 1. It is Assumed that all sales are in cash G32 33 2. Cash Balance 2018-(Closing Balance 2017 + Increase in 34 Accounts payable+EAT) SUM(131:133 -128+134 Total Assets -H28+H34 3. Cash Balance 2019 (Closing Balance 2018+Increase in Acconts payable+EAT-Assets purchased)

Please Note-

As the Net working Capital (NWC) remains same for both years so, it is considered that all sales,payment and assets purchased would be in cash.

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