ATTAACHED HOMEWORK THAT HAS BEEN COMPLETED EXCEPT THE RED TAB NAMED SUNRISE INDUSTRY. WILL NEED IT TO BE COMPLETE SHOWING THE FORMULAS IN THE ANSWER. WOULD LIKE WHEN IT IS TIME TO DO THIS ASSIGNMENT...

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ATTAACHED HOMEWORK THAT HAS BEEN COMPLETED EXCEPT THE RED TAB NAMED SUNRISE INDUSTRY. WILL NEED IT TO BE COMPLETE SHOWING THE FORMULAS IN THE ANSWER. WOULD LIKE WHEN IT IS TIME TO DO THIS ASSIGNMENT TO BE DONE BY THE SAME EXPERT THAT I HAD FOR74723
Answered 1 days AfterJan 23, 2021

Answer To: ATTAACHED HOMEWORK THAT HAS BEEN COMPLETED EXCEPT THE RED TAB NAMED SUNRISE INDUSTRY. WILL NEED IT...

Shakeel answered on Jan 24 2021
148 Votes
P3-19
    P3–19 Common-size statement analysis A common-size income statement for Creek Enterprises’ 2018 operations follows. Using the firm’s 2019 income statement presented in Problem 3–16, develop the 2019 common-size income statement and compare it with the 2018 statement. Which areas require further analysis and investigation?
                    P3-16 Chart
    Creek Enterprises Common-Size Income Statement for the Year Ended December 31, 2018                Creek Enterprises Income Statement for the Year Ended December 31, 2019
    Sales revenue ($35,000,000)    100.00%            Sales revenue    $30,000,000
    Less: Cost of goods sold      65.9             Less: Cost of goods sold     21,000,000
          Gross profits      34.1%                  Gross
profits    $ 9,000,000
    Less: Operating expenses                Less: Operating expenses
          Selling expense      12.7%                  Selling expense    $ 3,000,000
          General and administrative expenses        6.3                   General and administrative expenses    1,800,000
          Lease expense        0.6                   Lease expense    200,000
          Depreciation expense        3.6                    Depreciation expense      1,000,000
                Total operating expense      23.2%                        Total operating expense    $ 6,000,000
          Operating profits      10.9%                  Operating profits    $ 3,000,000
    Less: Interest expense        1.5             Less: Interest expense      1,000,000
          Net profits before taxes        9.4%                  Net profits before taxes    $ 2,000,000
    Less: Taxes (rate=21%rate=21%)        2.0             Less: Taxes (rate=21%rate=21%)      420,000
          Net profits after taxes        7.4%                  Net profits after taxes    $1,580,000
    Less: Preferred stock dividends        0.1             Less: Preferred stock dividends      100,000
          Earnings available for common stockholders        7.3%                  Earnings available for common stockholders    $ 1,480,000
         ANSWER
        2018                2019
        %    AMOUNT        %    AMOUNT    DIFFERENCE
    Sales Revenue    100.00%    $35,000,000.00        100.00%    30,000,000    0.00%
    Less: Cost of goods sold    65.90%    $23,065,000.00        70.00%    21,000,000    -4.10%
     Gross Profit    34.10%    $11,935,000.00        30.00%         9,000,000    4.10%
    Less: Operating Expenses
     Selling Expenses    12.70%    $4,445,000.00        10.00%         3,000,000    2.70%
     General and Administrative expenses    6.30%    $2,205,000.00        6.00%         1,800,000    0.30%
     Lease expense    0.60%    $210,000.00        0.67%           200,000    -0.07%
     Depreciation expense    3.60%    $1,260,000.00        3.33%         1,000,000    0.27%
     Total operation expenses    23.20%    $8,120,000.00        20.00%         6,000,000    3.20%
     Operating profits    10.90%    $3,815,000.00        10.00%         3,000,000    0.90%
    Less: Interest expenses    1.50%    $525,000.00        3.33%         1,000,000    -1.83%
     Net profit before tax    9.40%    $3,290,000.00        6.67%         2,000,000    2.73%
    Less: Taxes(rate = 21%)    2.00%    $700,000.00        1.40%           420,000    0.60%
     Net profit after tax    7.40%    $2,590,000.00        5.27%         1,580,000    2.13%
    Less: Preferred stock dividend    0.10%    $35,000.00        0.33%           100,000    -0.23%
     Earnings available to common shareholders    7.30%    $2,555,000.00        4.93%         1,480,000    2.37%
    Areas requiring analysis and investigation
    1. Cost of goods has increased by 4% whereas sales has decreased compared to last year
    2. Interest expense has increased even though expenses has decreased.
P4-20
    P4–20 Integrative: Pro forma statements Red Queen Restaurants wishes to prepare financial plans. Use the financial statements and the other information provided below to prepare the financial plans. The following financial data are also available:
    1. The firm has estimated that its sales for 2020 will be $900,000.
    2. The firm expects to pay $35,000 in cash dividends in 2020.
    3. The firm wishes to maintain a minimum cash balance of $30,000.
    4. Accounts receivable represent approximately 18% of annual sales.
    5. The firm’s ending inventory will change directly with changes in sales in 2020.
    6. A new machine costing $42,000 will be purchased in 2020. Total depreciation for 2020 will be $17,000.
    7. Accounts payable will change directly in response to changes in sales in 2020.
    8. Taxes payable will equal one-fourth of the tax liability on the pro forma income statement.
    9. Marketable securities, other current liabilities, long-term debt, and common stock will remain unchanged.
    a. Prepare a pro forma income statement for the year ended December 31, 2020, using the percent-of-sales method.
    b. Prepare a pro forma balance sheet dated December 31, 2020, using the judgmental approach.
    c. Analyze these statements, and discuss the resulting external financing required
    Red Queen Restaurants Income Statement for the Year Ended December 31, 2019             Red Queen Restaurants Balance Sheet December 31, 2019
    Sales revenue    $800,000         Assets         Liabilities and stockholders’ equity
    Less: Cost of goods sold       600,000        Cash    $32,000    Accounts payable    $100,000
          Gross profits    $200,000        Marketable securities    18,000    Taxes payable    20,000
    Less: Operating expenses       100,000        Accounts receivable    150,000    Other current liabilities             5,000
          Net profits before taxes    $100,000        Inventories       100,000         Total current liabilities    $125,000
    Less: Taxes (rate = 21%)       21,000             Total current assets    $300,000    Long-term debt       200,000
          Net profits after taxes    $79,000        Net fixed assets       350,000         Total liabilities    $325,000
    Less: Cash dividends       20,000             Total assets    $650,000    Common stock    150,000
          To retained earnings    $59,000                      Retained earnings       175,000
                                  Total liabilities and stockholders’ equity    $650,000
            PUT IN FORMULA
     Red Queen Restaurants Income Statement for the Year Ended December 31, 2019        % SALES            Red Queen Restaurants Income Statement for the Year Ended December 31, 2019
    Sales revenue    $800,000            Sales revenue    $900,000
    Less: Cost of goods sold    600,000    75%        Less: Cost of goods sold    $675,000    75%
          Gross profits    $200,000    25%              Gross profits    $225,000    25%
    Less: Operating expenses    100,000    13%        Less: Operating expenses    $112,500.00    12.50%
          Net profits before taxes    $100,000    13%              Net profits before taxes    $112,500.00    12.50%
    Less: Taxes (rate = 21%)    21,000    3%        Less: Taxes (rate = 21%)    $23,625.00
          Net profits after taxes    $79,000    10%              Net profits after taxes    $88,875.00
    Less: Cash dividends    20,000    3%        Less: Cash dividends    $35,000.00
          To retained earnings    $59,000    7%              To retained earnings    $53,875.00
    Assets             Liabilities and Stockholders' equity
    Cash    $49781        Accounts payable    $112,500.0
    Marketable securities                            $18,000        Taxes payable    $5,906
    Accounts receivable    $162,000.00        Other current liabilities    $5,000
    Inventories    $112,500.00        External Finance    $15,000
    Total current assets    $342,281.00        Total...
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