Consider the following simplified financial statements for the Yoo Corporation (assuming no income taxes):

Income Statement Balance Sheet

Sales $45,700 Assets $21,900 Debt $5,900

Costs 40,100 Equity 16,000

Net income $5,600 Total $21,900 Total $21,900

The company has predicted a sales increase of 6 percent. It has predicted that every item on the balance sheet will increase by 6 percent as well.

Create the pro forma statements and reconcile them.

These are the new and reconciled statements

Explanation:

First, we have to design the original statements this way:

Yoo Corporation

Income statement

Sales 45.700

Costs 40.100

Net income 5.600

Total 45.700 45.700

Yoo Corporation

Financial position statement

Assets 21.900

Debt 5.900

Equity 16.000

Total 21.900 21.900

Now we can create the new statements multiply every item by 1,06 or 106% to include the increase of 6 percent

Yoo Corporation

Income statement

Sales 48.442

Costs 42.506

Net income 5.936

Total 48.442 48.442

Yoo Corporation

Financial position statement

Assets 23.214

Debt 6.254

Equity 16.960

Total 23.214 23.214