The balance sheet of the Emery Company is presented below:
Emery Company Balance Sheet
March 31, 2010
(Millions of Dollars)
Current assets $18 Accounts payable $9
Fixed assets 38 Notes payable 0
Total $56 Long-term debt 15
Common equity 32
Total $56
For the year ending March 31, 2010, Jackson had sales of $58 million. The common stockholders receive all net
earnings of the firm in the form of cash dividends, leaving no funds from earnings available to the firm for
expansion (assume that depreciation expense is just equal to the cost of replacing worn-out assets).
Construct a pro forma balance sheet for March 31, 2011 for an expected level of sales of $75.4 million. Assume
current assets and accounts payable vary as a percent of sales, and fixed assets remain at the present level. Use
notes payable as discretionary financing.
Jackson Company
Pro Forma Balance Sheet
March 31, 2011
Current assets $23.4 Accounts payable $11.7
Fixed assets 38.0 Notes payable 2.7
Total $61.4 Long-term debt 15.0
Common equity 32.0
Total $61.4
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