Posted by Rachael on .
The following data pertain to Pavilion Products Inc. (PPI):
PPI has outstanding debt in the form of accounts payable, 6-month notes payable, and long-term bonds. The notes carry a 10% interest rate and the bonds carry an 8.5% rate. Both the notes and bonds were outstanding for the entire year.
Retained earnings at the beginning of the year was $15,000.
The dividend payout ratio is 25%.
The net profit margin is 6%.
The return on equity (ROE) is 5.5%.
The inventory turnover ratio is 6 times.
The days sales outstanding is 102 days.
Hint: New retained earnings = old retained earnings + (new sales) * (net profit margin) * (1 – dividend payout ratio)
Given the information above and below, complete PPI's balance sheet and income statement. Submit your answers to your instructor for evaluation.
Pavilion Products Inc. Balance Sheet at Dec. 31, 200X
Cash $7,500 Accounts Payable _____
Inventories _____ Notes Payable $10,000
Accounts Receivable _____
Total Current Assets _____ Total Current Liabilities _____
Net Fixed Assets $54,000 Bonds Payable $30,000
Total Debt _____
Common Stock _____
Retained Earnings _____
Total Assets _____ Total Lia. & Eq _____
Pavilion Products Inc. Income Statement for Year Ended Dec. 31, 200X
Cost of Goods Sold ______
Gross Profit ______
Selling Expenses $2,700
General & Administrative Expenses $1,900
Interest Expense ______
Net Profit before Taxes ______
Net Profit ______