Consider the following simplified financial statements for the Wims Corporation
ID: 2817160 • Letter: C
Question
Consider the following simplified financial statements for the Wims Corporation (assuming no income taxes): Income Statement Balance Sheet Sales $ 38,000 Assets $ 27,300 Debt $ 6,700 Costs 32,600 Equity 20,600 Net income $ 5,400 Total $ 27,300 Total $ 27,300 The company has predicted a sales increase of 15 percent. It has predicted that every item on the balance sheet will increase by 15 percent as well. Create the pro forma statements and reconcile them. (Input all amounts as positive values. Do not round intermediate calculations.) What is the plug variable?
Explanation / Answer
Ending equity=Beginning equity+Net income-Dividends
Dividends=(20600+6210-23690)=$3120
Hence plug variable is dividends of the amount of $3120.
Sales(38000*1.15) $43700 Costs(32600*1.15) $37490 Net income $6210