Reference no: EM132837958

Question - XYZ Corporation published the following information in its financial statements for its 2020 annual report:

Income Statement Items:

Sales $74,000

Cost of goods sold 48,000

Gross profit 26,000

Cash Operating expenses $8,000

Depreciation 3,000

Total Operating Expenses 11,000

EBIT 15,000

Interest expense 720

EBT 14,280

Income tax expense 4,427

Net Income $9,853

Balance Sheet Items:

Cash $8,000

Marketable securities 4,000

Accounts receivable 11,000

Inventories 9,000

Fixed Assets, net 22,000

Total Assets $54,000

Accounts payable $7,000

Accrued payables 2,000

Bonds payable 12,000

Common stock 22,000

Retained earnings 11,000

Total Liabilities and Equity $54,000

Sales in 2021 are estimated to be $92,000.

-$5,000 of the cash operating expenses for 2020 are considered variable costs, and the remainder are fixed costs.

-Depreciation and the remainder of cash operating expenses are considered to be fixed costs.

-Cash, accounts receivable, inventories, accounts payable, and accrued payables are considered to be spontaneous items.

-Marketable securities, net fixed assets, bonds payable, and common stock are discretionary.

-$5,000 of bonds payable at the end of 2020 are considered "current liabilities," and will be repaid on January 1, 2021. The interest rate on the bonds for 2019 will remain the same as it was in 2020.

-The company will purchase fixed assets of $3,600 in 2021, but overall depreciation for 2021 will remain the same dollar amount as it was for 2020.

-The firm paid a dividend of $3,941 in 2020, and will maintain its 2021 dividend payout ratio for 2021.

-The income tax rate for 2021 is expected to be the same as it was in 2020.

Required - Prepare the 2021 pro-forma income statement and balance sheet for XYZ Corporation.