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Using the 2 0 2 3 trial balance and additional information below, prepare the projected ( 2 0 2 4 )  financial statements for Walnut Grove. The prior year data ( provided ) is the starting point for your projections, and then each of the assumptions listed below will also be used. Prepare an Excel workbook which contains the following information: • Tab 1 : 2 0 2 3 Trial Balance ( provided in this document ) • Tab 2 : 2 0 2 3 Projected Income Statement • Tab 3 : 2 0 2 3 Projected Balance Sheet • Tab 4 : 2 0 2 3 Projected Statement of Cash Flows Assumptions: 1 . Sales will change as follows: a . Material & Supplies Sales will increase 4 . 2 %  b . Small Tool Sales will increase 3 . 0 %  c . Tool Rental Revenue will continue throughout the 2 0 2 4 year. An average of 2 5  tools will be rented each week. The weekly rental per tool is $ 4 0 . Assume that the average number of tools given will be rented for all 5 2 weeks. 2 . Cost of sales for materials and supplies and small tools will increase proportionately based on their current percentage of sales, respectively. ( HINT: You will need to use vertical analysis. ) 3 . Small tools, including blades and other items, is expected to total $ 6 , 6 2 5 in 2 0 2 4 .  4 . Office supplies and postage are expected to increase by 4 . 5 % during 2 0 2 4 .  5 . On January 1 st , the company will invest $ 1 3 7 , 0 0 in new equipment for its custom cabinet division. a . This equipment will have a 5 - year life and should be depreciated using the straight - line method. This purchase represents the only expected change to property, plant, and equipment. b . The company will finance the equipment purchased with a 5 - year note at 5 . 3 5 %  interest. You will need to use an amortization schedule to find the principle and interest payment amounts. The loan is paid monthly. 6 . In relation to # 6 above, the custom cabinet sales division begins operations in 2 0 2 4 . The following assumptions must be used to project the impact on the financial statements. ( Hint: You may need to add accounts to the trial balance. ) a . Walnut Grove anticipates that it will sell 1 8 0 cabinets at an average selling price of $ 5 , 5 0 0 . b . Direct materials per cabinet are $ 1 , 0 0 0 per unit. c . The direct labor per cabinet is 6 hours, and Walnut Grove pays $ 3 0 . 0 0 / hour for this labor. d . Factory overhead is calculated at 3 5 % of direct labor. 7 . The building is being depreciated over a 3 9 - year life, the computers and software are being depreciated over a 3 - year life, and the furniture and fixtures are being depreciated over a 5 - year life, all using straight - line depreciation. 8 . Because of the new cabinet division, annual insurance costs will increase to $ 2 7 , 0 0 0 ,  effective January 1 . The company prepaid 2 years of this insurance and received a 5 . 0 %  discount for the 2 - year prepayment. 9 . On January 1 , a new cabinet division manager will be hired at a cost of $ 6 7 , 0 0 0 . In additional to the new cabinet division manager, 3 new employees will be hired at an average wage of $ 2 2 . 5 0 per hour, employees work an average of 4 0 hours per week. Payroll taxes and benefits should be calculated at 2 0 % of wages. 1 0 . With 2 0 weeks remaining in the year, 3 additional employees will be hired at a rate of $ 2 0 . 5 0 per hour, based on an average of 3 5 hours per week. 1 1 . The income tax rate is 2 5 % . 1 2 . At the end of the year, Walnut Grove will have $ 3 9 , 7 5 0 in ending inventory. 1 3 . In relation # 1 3 , purchases are made evenly throughout the year and are paid in full in the month following purchase. 1 4 . Sales are collected in full the month following the sale. During the month of December, invoiced sales totaled $ 1 5 0 , 0 0 0 . 1 5 . The sales tax rate is 5 . 3 % . 1 6 . At the end of the year, Walnut Grove has received full payment for 2 0 custom cabinet orders that will be completed in January 2 0 2 4 . 0 - - - - - - - - - - - - - show all calculations ( how you get each # for the 2 0 2 4 trial balance ) . make sure to prepare a multistep income statement and use the indirect method for the statement of cash flows ) provide intro, step wise solution using tables and conclusion

Question:

Using the 2 0 2 3 trial balance and additional information below, prepare the projected ( 2 0 2 4 )  financial statements for Walnut Grove. The prior year data ( provided ) is the starting point for your projections, and then each of the assumptions listed below will also be used. Prepare an Excel workbook which contains the following information: • Tab 1 : 2 0 2 3 Trial Balance ( provided in this document ) • Tab 2 : 2 0 2 3 Projected Income Statement • Tab 3 : 2 0 2 3 Projected Balance Sheet • Tab 4 : 2 0 2 3 Projected Statement of Cash Flows Assumptions: 1 . Sales will change as follows: a . Material & Supplies Sales will increase 4 . 2 %  b . Small Tool Sales will increase 3 . 0 %  c . Tool Rental Revenue will continue throughout the 2 0 2 4 year. An average of 2 5  tools will be rented each week. The weekly rental per tool is $ 4 0 . Assume that the average number of tools given will be rented for all 5 2 weeks. 2 . Cost of sales for materials and supplies and small tools will increase proportionately based on their current percentage of sales, respectively. ( HINT: You will need to use vertical analysis. ) 3 . Small tools, including blades and other items, is expected to total $ 6 , 6 2 5 in 2 0 2 4 .  4 . Office supplies and postage are expected to increase by 4 . 5 % during 2 0 2 4 .  5 . On January 1 st , the company will invest $ 1 3 7 , 0 0 in new equipment for its custom cabinet division. a . This equipment will have a 5 - year life and should be depreciated using the straight - line method. This purchase represents the only expected change to property, plant, and equipment. b . The company will finance the equipment purchased with a 5 - year note at 5 . 3 5 %  interest. You will need to use an amortization schedule to find the principle and interest payment amounts. The loan is paid monthly. 6 . In relation to # 6 above, the custom cabinet sales division begins operations in 2 0 2 4 . The following assumptions must be used to project the impact on the financial statements. ( Hint: You may need to add accounts to the trial balance. ) a . Walnut Grove anticipates that it will sell 1 8 0 cabinets at an average selling price of $ 5 , 5 0 0 . b . Direct materials per cabinet are $ 1 , 0 0 0 per unit. c . The direct labor per cabinet is 6 hours, and Walnut Grove pays $ 3 0 . 0 0 / hour for this labor. d . Factory overhead is calculated at 3 5 % of direct labor. 7 . The building is being depreciated over a 3 9 - year life, the computers and software are being depreciated over a 3 - year life, and the furniture and fixtures are being depreciated over a 5 - year life, all using straight - line depreciation. 8 . Because of the new cabinet division, annual insurance costs will increase to $ 2 7 , 0 0 0 ,  effective January 1 . The company prepaid 2 years of this insurance and received a 5 . 0 %  discount for the 2 - year prepayment. 9 . On January 1 , a new cabinet division manager will be hired at a cost of $ 6 7 , 0 0 0 . In additional to the new cabinet division manager, 3 new employees will be hired at an average wage of $ 2 2 . 5 0 per hour, employees work an average of 4 0 hours per week. Payroll taxes and benefits should be calculated at 2 0 % of wages. 1 0 . With 2 0 weeks remaining in the year, 3 additional employees will be hired at a rate of $ 2 0 . 5 0 per hour, based on an average of 3 5 hours per week. 1 1 . The income tax rate is 2 5 % . 1 2 . At the end of the year, Walnut Grove will have $ 3 9 , 7 5 0 in ending inventory. 1 3 . In relation # 1 3 , purchases are made evenly throughout the year and are paid in full in the month following purchase. 1 4 . Sales are collected in full the month following the sale. During the month of December, invoiced sales totaled $ 1 5 0 , 0 0 0 . 1 5 . The sales tax rate is 5 . 3 % . 1 6 . At the end of the year, Walnut Grove has received full payment for 2 0 custom cabinet orders that will be completed in January 2 0 2 4 . 0 - - - - - - - - - - - - - show all calculations ( how you get each # for the 2 0 2 4 trial balance ) . make sure to prepare a multistep income statement and use the indirect method for the statement of cash flows ) provide intro, step wise solution using tables and conclusion

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Asked by: Test User 100098
Created at: 2025-04-28 09:40:24

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Certainly! Below is a **stepwise guide** (with calculations and tables) to prepare projected 2024 financial statements for Walnut Grove, based on your 2023 trial balance and the assumptions provided. --- ## **INTRODUCTION** **Objective:** To create projected 2024 financial statements (Income Statement, Balance Sheet, and Statement of Cash Flows) for Walnut Grove, using the 2023 trial balance as a base and applying various business assumptions. **Approach:** - Start from 2023 Trial Balance - Apply each assumption step-by-step - Show calculations for every projection - Prepare a multi-step income statement - Use the indirect method for the statement of cash flows - Organize all calculations and financials using tables --- ## **STEPWISE SOLUTION** ### **STEP 1: Gather 2023 Trial Balance** Paste your 2023 trial balance into **Tab 1** in Excel. --- ### **STEP 2: Project 2024 Sales** | **Category** | 2023 Sales | % Change/Formula | 2024 Sales Calculation | 2024 Sales | |------------------------|------------|-------------------------------|-------------------------------|-----------------| | Materials & Supplies | $A | Increase 4.2% | $A x 1.042 | $A1 | | Small Tools | $B | Increase 3.0% | $B x 1.03 | $B1 | | Tool Rental Revenue | $C | 25 tools x $40 x 52 weeks | 25 x 40 x 52 | $52,000 | | Custom Cabinets | n/a | 180 x $5,500 | 180 x 5,500 | $990,000 | *Let’s assume:* - $A = $450,000 - $B = $120,000 - $C = $30,000 *Calculations:* - Materials & Supplies: $450,000 x 1.042 = **$468,900** - Small Tools: $120,000 x 1.03 = **$123,600** - Tool Rental: **$52,000** - Custom Cabinets: **$990,000** **Total Sales (2024):** $468,900 + $123,600 + $52,000 + $990,000 = **$1,634,500** --- ### **STEP 3: Cost of Sales Projections** #### **A. Materials & Supplies, Small Tools (Vertical Analysis)** Find 2023 cost % of sales from trial balance: | Category | 2023 Sales | 2023 COGS | 2023 COGS % of Sales | 2024 Sales | 2024 COGS = 2024 Sales x % | |------------------------|------------|-----------|----------------------|------------|---------------------------| | Materials & Supplies | $450,000 | $315,000 | 70% | $468,900 | $468,900 x 70% = $328,230 | | Small Tools | $120,000 | $85,000 | 70.8% | $123,600 | $123,600 x 70.8% = $87,465| #### **B. Tool Rental Revenue** Assume no direct cost given (if not, use 2023 ratio or $0). #### **C. Small Tools, Blades, etc.** Given for 2024: **$6,625** #### **D. Custom Cabinets (New)** - Direct Materials: 180 x $1,000 = **$180,000** - Direct Labor: 180 x 6 hrs x $30/hr = 1,080 x $30 = **$32,400** - Factory Overhead: 35% of Direct Labor = $32,400 x 0.35 = **$11,340** | Item | Calculation | Amount | |--------------|---------------|-----------| | Direct Mat | 180 x $1,000 | $180,000 | | Direct Labor | 1,080 x $30 | $32,400 | | Overhead | $32,400 x 35% | $11,340 | | **Total** | | $223,740 | #### **E. Total Cost of Sales** $328,230 (Mat) + $87,465 (Tools) + $6,625 + $223,740 = **$646,060** --- ### **STEP 4: Project Operating Expenses** #### **A. Office Supplies & Postage** - 2023 amount (assume $9,000) - Increase by 4.5%: $9,000 x 1.045 = **$9,405** #### **B. Depreciation** | Asset | 2023 Value | Life (years) | Depreciation (2024) | |-----------------------|------------|--------------|----------------------| | Building | $780,000 | 39 | $20,000 | | Computers/Software | $9,000 | 3 | $3,000 | | Furniture/Fixtures | $25,000 | 5 | $5,000 | | New Equipment | $137,000 | 5 | $27,400 | **Total Depreciation:** $20,000 + $3,000 + $5,000 + $27,400 = **$55,400** #### **C. Insurance** - 2024 total: $27,000 (from assumptions, prepaid for 2 years w/ 5% discount) - Prepaid amount: $27,000 x 2 x 0.95 = $51,300 paid in Jan 2024 - Insurance expense for 2024 = $27,000 #### **D. Wages, New Hires, Payroll Taxes/Benefits** ##### **New Cabinet Division Manager** - Salary: $67,000 ##### **Three New Employees (Full Year)** - Wage: $22.50/hr x 40 hrs x 52 wks = $46,800 per employee - 3 employees: $140,400 ##### **Payroll Taxes/Benefits (Full Year Employees)** - ($67,000 + $140,400) x 20% = $41,880 ##### **Three New Employees (Last 20 Weeks)** - Wage: $20.50/hr x 35 hrs x 20 wks = $14,350 per employee - 3 employees: $43,050 ##### **Payroll Taxes/Benefits (20 Week Employees)** - $43,050 x 20% = $8,610 ##### **Total New Payroll** - Wages: $67,000 + $140,400 + $43,050 = $250,450 - Payroll Taxes/Benefits: $41,880 + $8,610 = $50,490 ##### **Total Payroll (All new hires):** $250,450 + $50,490 = **$300,940** #### **E. Interest on New Loan** - Loan Amount: $137,000, 5.35%, 5 years, monthly - Monthly payment = $137,000 \* [0.0535/12] / [1 - (1 + 0.0535/12)^-60] ≈ $2,605.56/mo - 2024 Interest (use amortization schedule, for year 1 interest: approx $7,110) #### **F. Other Expenses** Add any other recurring expenses from 2023, adjust as per assumptions. --- ### **STEP 5: Calculate Income Taxes** - **Income before taxes** × 25% = **Income tax expense** --- ### **STEP 6: Prepare Multistep Income Statement (Tab 2)** | **Walnut Grove** | **2024 Projected** | |----------------------------------|-------------------| | **Sales:** | | | Materials & Supplies | $468,900 | | Small Tools | $123,600 | | Tool Rentals | $52,000 | | Custom Cabinets | $990,000 | | **Total Sales** | $1,634,500 | | **Cost of Goods Sold:** | | | Materials & Supplies | $328,230 | | Small Tools | $87,465 | | Small Tools/Blades/Other | $6,625 | | Custom Cabinets: | | | - Direct Materials | $180,000 | | - Direct Labor | $32,400 | | - Overhead | $11,340 | | **Total COGS** | $646,060 | | **Gross Profit** | $988,440 | | Operating Expenses: | | | Office Supplies/Postage | $9,405 | | Depreciation | $55,400 | | Insurance Expense | $27,000 | | Payroll/Benefits (new hires) | $300,940 | | Interest Expense | $7,110 | | Other (as per 2023, adjusted) | $X | | **Total Operating Expenses

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