Austin Consolidated Industries - Product Line - FINA 470

Three year Income Statement and Cash flow Budget

Years 2014-2016

Assignment:
Based on the following information prepare a three year income statemen, balance sheets and cash flow
budget.

Hint: Only the principle portion of loan payments are a financing activity.

Assume cash dividends each year as follows:

2014 3,000
2015 4,000
2016 5,000

Assumptions related to the income projections:

Sales for 2013 200,000

Sales growth rate 10%

Variable cost:
Amounts as a % of sales 65%
(Assumed that this is the variable portion of cost of goods sold)

Fixed Operation cost in 2013 50,000

Annual increases 5%
Includes depreciation of equal to 10%
of operation costs
(Assume that the fixed operation cost are all part of cost of goods sold)

Inaddition to selling costs, our budget needs to reflect our product

line allocation of corporate costs.
2014 2,000
2015 4,000
2016 5,000

Selling and admistrative expense:

2014 23,000
2015 24,000
2016 25,000

Interest expense: 2014 1,000

2015 1,400
2016 2,000

Income tax rate 38%

(Assume that there are no permament or timing difference related to revenue and expense items)

Assumptions related to the statement of change:

Assumptions related to investing activities:

Source of funds - Proceeds from sale of fixed assets 2014 5,000

(assume assets sold at book value) 2015 5,500
2016 6,000

Use of funds - Purchase of capitial expenitures: 2014 4,000

2015 5,000
2016 5,500

Assumptions relate to financing activities: Total payments (See hint above)

Debt payments 2014 1,500
2015 1,400
2016 1,300
Austin Consolidated Industries - Product Line - FINA 470

2014 2015
Income Statements:

Sales 220,000 242,000

Cost of goods sold:
Variable 143,000 157,300
Fixed 52,500 55,125
Total cost of good sold 195,500 212,425
Gross Profit 24,500 29,575
Selling and administrative expense 23,000 24,000
Corporate overhead cost 2,000 4,000
Interest expense 1,000 1,400
Net income before tax (1,500) 175
Income taxes (benefit) (570) 67
Net income (loss) (930) 109

Balance Sheets:

Assets:
Cash 8,250 7,138
Accounts receivables 22,000 24,200
Inventory 38,500 42,350
Fixed assets 58,750 52,738
Deferred tax asset 570 503
Total assets 128,070 126,929

Liabilities:
Accounts Payable 27,500 30,250
Notes payable 19,500 19,500
47,000 49,750
Equity
Common stock 20,000 20,000
Additional paid in capital 30,000 30,000
Retained earnings 31,070 27,179
81,070 77,179

Total liabilities and equity 128,070 126,929

Statement of Cash Flow:

Operating Activities:
Net income (930) 109
Non-cash adjustments:
Depreciation expense 5,250 5,513
Decrease (increase) in accounts receivables (2,000) (2,200)
Decrease (increase) in inventory (3,500) (3,850)
Increase (decrease) in accounts payable 2,500 2,750
Increase in deferred taxes (570) 67
Cash provided (used) in operating activities 750 2,388

Investing Activities:
Proceeds from sale of fixed assets 5,000 5,500
Purchase of fixed assets (4,000) (5,000)
Cash provided (used) in investing activities 1,000 500

Financing activities:
Reduction in note payable (500) -
Proceeds from additional borrowings - -
Dividends paid (3,000) (4,000)
Cash provided (used) in financing activites (3,500) (4,000)

Net cash provided (used) (1,750) (1,112)

Beginning cash 10,000 8,250

Ending cash 8,250 7,138
2016

266,200

173,030
57,881
230,911
35,289
25,000
5,000
2,000
3,289
1,250
2,039

8,038
26,620
46,585
46,449

127,693

33,275
20,200
53,475

20,000
30,000
24,218
74,218

127,693
2,039

5,788
(2,420)
(4,235)
3,025
503
4,701

6,000
(5,500)
500

-
700
(5,000)
(4,300)

901

7,138
8,038
Austin Consolidated Industries - Product Line - FINA 470

2014 2015
Income Statements:

Sales 220,000
Cost of goods sold:
Variable 157,300
Fixed
Total cost of good sold
Gross Profit 24,500
Selling and administrative expense
Corporate overhead cost 4,000
Interest expense 1,000
Net income before tax (1,500)
Income taxes (benefit) 67
Net income (loss)

Balance Sheets:

Assets:
Cash 8,250
Accounts receivables
Inventory 42,350
Fixed assets 58,750
Deferred tax asset 503
Total assets

Liabilities:
Accounts Payable
Notes payable 19,500
47,000 49,750
Equity
Common stock 20,000
Additional paid in capital
Retained earnings 27,179
77,179

Total liabilities and equity 126,929

Statement of Cash Flow:

Operating Activities:
Net income (930)
Non-cash adjustments:
Depreciation expense
Decrease (increase) in accounts receivables (2,200)
Decrease (increase) in inventory
Increase (decrease) in accounts payable 2,500
Decrease (increase) in deferred taxes
Cash provided (used) in operating activities 750

Investing Activities:
Proceeds from sale of fixed assets 5,500
Purchase of fixed assets
Cash provided (used) in investing activities 500

Financing activities:
Reduction in note payable -
Proceeds from additional borrowings
Dividends paid (4,000)
Cash provided (used) in financing activites (3,500)

Net cash provided (used) (1,750)

Beginning cash 8,250

Ending cash
2016

57,881
230,911

25,000

2,039

26,620

127,693

33,275

53,475

30,000
5,788

503

(5,500)

700

8,038