1.
Pro forma income statement Pro forma balance sheet
Sales $ 26,450 Assets $ 18,170 Debt $ 5,980
Costs 19,205 Equity 12,190
Net income $ 7,245 Total $ 18,170 Total $ 18,170
Equity = Total liabilities and equity – Debt
Equity = $18,170 – 5,980
Equity = $12,190
Equity increased by:
Equity increase = $12,190 – 10,600
Equity increase = $1,590
Net income is $7,245 but equity only increased by $1,590; therefore, a dividend of:
Dividend = $7,245 – 1,590
Dividend = $5,655
3. An increase of sales to $7,434 is an increase of:
Sales increase = ($7,434 – 6,300) / $6,300
Sales increase = .18 or 18%
Assuming costs and assets increase proportionally, the pro forma financial statements will look like
this:
Pro forma income statement Pro forma balance sheet
Sales $ 7,434 Assets $ 21,594 Debt $ 12,400
Costs 4,590 Equity 8,744
Net income $ 2,844 Total $ 21,594 Total $ 21,144
If no dividends are paid, the equity account will increase by the net income, so:
Equity = $5,900 + 2,844
Equity = $8,744
