Agriculture Reference
In-Depth Information
Depreciation for the next year will be $25,000. In addition, during the next year Ted has
payments of $10,000 to make on his existing long-term debt and he will need to make a
principal payment of $10,000 on his new debt. He estimates next year's net income after
taxes will be $55,000, including the $5,000 gain on the sale of the depreciated equipment.
He plans to withdraw $50,000 for family living, so he will retain $5,000 in the business.
With this information and these forecasts, Ted can now develop a pro forma statement
(
Table 9.7
).
The accounts reported on the pro forma balance sheet as of 12/31/2012 for Aggieland
Landscaping company are determined as follows. First, the accounts receivable, inventory,
Table 9.6
Pro forma statement of cash fl ows for Aggieland landscaping company, year
ending December 31, 2012
Cash Flow from Operating Activities
Net Income after Taxes $50,000
+ Depreciation
+ 25,000
± Change in Accounts Receivable
0
± Change in Accounts Payable
0
± Change in Accrued Expenses
0
− Withdrawal for Family Living
−50,000
Net Cash from Operating Activities
$25,000
Cash Flow from Investing Activities
Cash Proceeds from Sale of Equipment
$5,000
− Cash Purchases of Equipment -55,000
Net Cash from Investing Activities $(50,000)
Cash Flow from Financing Activities
+ Increase in Equipment Notes $50,000
− Principal Payments on Long-term and Equipment Notes
-20,000
Net Cash from Financing Activities
+ $30,000
Net Change in Cash
+ $5,000
Beginning Cash Balance
0
Ending Cash Balance
$5,000
Table 9.7
Pro forma balance sheet for Aggieland landscaping company, year ending December 31,
2012
Assets
Liabilities
Current Assets:
Current Liabilities:
Cash
$5,000
Accounts Payable
$5,000
Accounts Receivable
14,000
Accrued Expenses
2,000
Inventory
21,000
Current Portion of
Fixed Assets:
Long-Term Debt
20,000
Equipment
$105,000
Long-Term Liabilities:
Buildings
50,000
Long-Term Debt
60,000
− Accumulated Depreciation
55,000
Total liabilities
$87,000
Net Buildings and Equipment
100,000
Owner equity
$133,000
Land
80,000
Total liabilities and owner
equity
$220,000
Total assets
$220,000
