Reference no: EM133542165

Question: How would these statements affect a future pro forma income statement, balance sheet, cash flow statement, and retained earnings statement what would need to happen to the original statements and what would their calculations be

1. A new advertising campaign that involves spending 15% more than last year on ad/promo to try to boost sales. They expect sales to therefore go up by 25% in the coming year. 
2. 2. Cutting their inventory costs by keeping to the same closing inventory level as in the previous year, even though their sales are expected to be higher. 
3. 3. Buying new equipment for $20,000 that will use the raw materials more effectively, and therefore allow the planned reduction in inventory. The new equipment will be financed from cash currently on-hand, and will be depreciated over 12 years. All capital assets are depreciated on a straight-line basis. 
4. All other current accounts will maintain their current proportion to sales revenues, except as follows: ·
5.  Purchases will decrease to 60% of sales. 
6.  The income tax rate will rise to 25%. 
7. No new shares will be issued. But the paid dividends will be doubled. 
8. Assume the same $ amount of annual depreciation for the previous assets.
9. Existing long-term liabilities and capital assets will be unchanged.