Proforma Statements

Prior year Balance Sheet:

Information from recent budgets for the coming year:

1. Projected sales are $1,800,000  (12,690 units)

2. Projected direct material purchases are $500,000
3. Projected direct material usage is $495,000

4. Projected direct labor expense is $400,000

5. Projected overhead is $380,000

6. Projected selling expenses are $120,000
7. Projected administrative expenses are $300,000
8. Projected cash collections are $1,785,000
9. Projected payments for materials (accounts payable) are $520,000
10. Projected payments for other operating expenses (other current liabilities) are $1,130,000

11. Projected depreciation expense is $55,000 and is already included in mfg overhead

Additional information that is available:

1. The expected tax rate is 35%
2. The company is planning a stock issue of $25,000

3. Income taxes are paid 3 months after the year-end

4. The company anticipates purchasing a new patent for $10,000 during the year.

5. WIP inventory is expected to decrease by $2,000

6. Finished goods inventory is expected to increase by $8,000

7. Due to insurance rate increases, it is expected that prepaid expenses will increase by $3,000

Investment information:

1. A purchase of additional equipment for $75,000 is expected on January 1^st.
2. The purchase will be made using $50,000 cash and long-term debt will be increased by $25,000

Long-Term Debt information:

1. All long-term debt will have an 8% annual rate.

2. A payment of $50,000 including BOTH  principle and interest will be made on December 31^st.

Required: Prepare a cost of goods manufactured schedule, a proforma income statement and proforma balance sheet.