Mr.

T Kumar
12-month Profit Plan

Sales Rs.598,500
Cost of goods sold
Components Rs.197,000
Mfg payroll 145,000
Other Mfg. 62,000
Depreciation 8,500 412,500
Gross margin Rs.186,000
Selling, general and
Administration 63,000
Patent 20,000
Redesign costs 25,000
Incorporation costs 2,500
Operating profit Rs.75,500
Interest 500
Profit before taxes Rs.75,000
Tax expense 22,500
Net Income Rs.52,500

Notes 1:
* Beginning component parts inventory Rs.0 **Component parts used Rs.197,000
Purchases 212,100 Manufacturing payroll 145,000
Total available 212,100 Other manufacturing costs 62,000
Ending component parts inventory 15,100 Depreciation 8,500
Components parts used 197,000 Cost of goods sold 412,500

Mr. T Kumar
Projected Year-end Balance Sheet

Assets* Liabilities*
Cash Rs.78,400 Taxes payable Rs.22,500
Components inventory 15,100 Current liabilities Rs.22,500
Current assets Rs.93,500
Equipment (net) 76,500 Owner’s Equity
Patent (net) 100,000 Capital stock Rs.200,000
___ Retained earnings 47,500
Rs.270,000 Rs.270,000

*Taken from an US case study, so assets and liabilities are on reverse sides. Donot bother
about these.

GIM FAM PGDM FT (AY 2021-22) Prof. Ranjan DasGupta

Notes 2:

Mr. T Kumar
Change in Retained Earnings

Beginning retained earnings Rs.0

Net income 52,500
Dividends (5,000)
Ending retained earnings Rs.47,500

Notes 3:
Mr. T Kumar
Cash Reconciliation

Receipts Disbursements
New equity capital Rs.80,000
Incorporation Rs.2,500
Equipment 85,000
Redesign 25,000
Component parts 212,100
Bank loan 30,000
Bank loan 30,000
Loan interest 500
Manufacturing payroll 145,000
Other manufacturing 62,000
SG&A 63,000
Sales 598,500
Dividend 5,000
Total Rs.708,500 Rs.630,100

Cash Reconciliation
Receipts $708,500
Disbursements 630,100
Ending Balance $78,400

GIM FAM PGDM FT (AY 2021-22) Prof. Ranjan DasGupta