Question

Consider the following simplified financial statements for the Wims Corporation (assuming no income taxes): Income Statement Balance Sheet Sales $30,500 Assets $23,250 Debt $ 6,750 Costs 23,910 Equity 16,500 Net income $ 6,590 Total $23,250 Total $23,250 The company has predicted a sales increase of 20 percent. It has predicted that every item on the balance sheet will increase by 20 percent as well.Create the pro forma statements and reconcile them. (Input all answers as positive values. Do not round intermediate calculations.)

Answer 1

Answer:

The proforma income statement and balance sheet are found in the attached

Above all,additional financing of $1982  is required to finance the growth of 20%

Explanation:

The additional finance is necessary as the assets required for the additional growth of 20% is worth $27900 while debt plus equity(including the added profit of $1318) only gives $25918,there resulting in shortfall in finance of $1982.

Also, a different source of finance other than debt can be used depending the interest applicable since the amount involved is minute.