Sales Revenue ($250 X 6 Mos.) ......................................................................................................... $1,500
Sales Revenue ($250 X 6 Mos.) ......................................................................................................... $1,500
Sales Revenue ($250 X 6 Mos.) ......................................................................................................... $1,500
Telnet Corporation is a newly formed computer manufacturer. Telnet plans to begin operations on
January 1, Year 2. Selected financial information is available for the preparation of Telnet’s six-
month forecasted performance covering the period January 1 to June 30 of Year 2.
Required:
a. Prepare a pro forma income statement to portray the forecasted financial position of Telnet
Corporation for the six-month period ended June 30, Year 2.
b. Prepare a pro forma balance sheet as of June 30, Year 2.
c. Prepare a cash forecast analysis as in Exhibit 9A.4 for the six-month period ended June 30, Year 2.
a.
Telnet Corporation
Pro Forma Income Statement ($000s)
Six Months Ended June 30, Year 2
Beginning (given) 0
Material purchases ($125 x 6 mos.) 750 715 To W.I.P. inventory [a] (plug)
Ending (given) 35
Beginning (given) 0
Ending (given) 0
Beginning (given) 0
From W.I.P. inventory [b] 1,299 1,199 Cost of goods sold (plug)
Telnet Corporation
Pro forma Balance Sheet ($000s)
June 30, Year 2
ASSETS
Cash....................................................................................... $ 40 (minimum cash)
Accounts receivable.............................................................. 375 (45 days' sales)*
Inventories ($35 + $100)....................................................... 135 (given)
Prepaid expenses.................................................................. 7 (given)
Total current assets............................................................ 557 (subtotal)
Equipment............................................................................. 1,200
(given)
Less accumulated depreciation........................................... 210 ($35 x 6 mos.)
Equipment, net................................................................... 990 (subtotal)
Patents................................................................................... 40 (given)
Less amortization................................................................. 3 ($500 x 6 mos.)
Patents, net.......................................................................... 37 (subtotal)
Total Assets........................................................................... $1,584
Telnet Corporation
Forecasted Statement of Cash Flows
For Six Months Ended June 30, Year 2