Reference no: EM132485957

XYZ Corporation published the following information in its financial statements for its 2018 annual report:

Income Statement Items:

Sales                                                  $76,000

Cost of goods sold                               49,000

Gross profit                                        27,000

Cash Operating expenses                     $9,000

Depreciation                                       2,000

Total Operating Expenses                     11,000

EBIT                                                16,000

Interest expense                                    840

EBT                                                 15,160

Income tax expense                             5,306

Net Income                                       $9,854

Balance Sheet Items:

Cash                                              $9,000

Marketable securities                           2,000

Accounts receivable                          11,000

Inventories                                        7,000

Fixed Assets, net                                24,000

Total Assets                                    $53,000

Accounts payable                                 $8,000

Accrued payables                                 3,000

Bonds payable                                   12,000

Common stock                                     16,000

Retained earnings                                 14,000

Total Liabilities and Equity                     $53,000

1. Sales in 2019 are estimated to be $90,000.
2. $5,000 of the cash operating expenses for 2018 are considered variable costs, and the remainder are fixed costs.
3. Depreciation and the remainder of cash operating expenses are considered to be fixed costs.
4. Cash, accounts receivable, inventories, accounts payable, and accrued payables are considered to be spontaneous items.
5. Marketable securities, net fixed assets, bonds payable, and common stock are discretionary.
6. $5,000 of bonds payable at the end of 2018 are considered "current liabilities," and will be repaid on January 1, 2019. The interest rate on the bonds for 2019 will remain the same as it was in 2018.
7. The company will purchase fixed assets of $3,600 in 2019, but overall depreciation for 2019 will remain the same dollar amount as it was for 2018.
8. The firm paid a dividend of $3,942 in 2018, and will maintain its 2018 dividend payout ratio for 2019.
9. The income tax rate for 2019 is expected to be the same as it was in 2018.

Required:

Question 1: Prepare the pro-forma 2019 income statement and balance sheet for XYZ Corporation.