Consider the following income statement for the Heir Jordan Corporation: HEIR JORDAN CORPORATION
Income Statement
Sales $ 45,300 Costs 35,100 Taxable income $ 10,200 Taxes (25%) 2,550 Net income $ 7,650 Dividends $ 2,900 Addition to retained earnings 4,750
The balance sheet for the Heir Jordan Corporation follows.
HEIR JORDAN CORPORATION
Balance Sheet
Assets
Liabilities and Owners’ Equity
Current assets
Current liabilities
Cash $2,050
Accounts payable $ 2,400
Accounts receivable 4,700
Notes payable 4,500
Inventory 6,400
Total $ 6,900
Total $ 13,150
Long-term debt $ 25,000
Owners’ equity
Fixed assets
Common stock and paid-in surplus $ 15,000
Net plant and equipment $ 36,000
Retained earnings 2,250
Total $ 17,250
Total assets $ 49,150
Total liabilities and owners’ equity $ 49,150
Prepare a pro forma balance sheet, assuming an increase in sales of 13 percent, no new external debt or equity financing, and a constant payout ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e. g., 32.16.)
Calculate the EFN. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.)
Based on this information and the income statement, supply the missing information using the percentage of sales approach. Assume that accounts payable vary with sales, whereas notes payable do not.