PLAY TIME TOYS.

SUPPLEMENT 1 (TO DO)

PRO FORMA INCOME STATEMENTS UNDER LEVEL PRODUCTION (1991)

1990 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Net sales 7,433 108 126 145 125 125 125 145 1,458 1,655 1,925 2,057 1,006
Cost goods sold 5,203 70 82 94 81 81 81 94 950 1,078 1,254 1,340 656
Gross profit 2,230 38 44 51 44 44 44 51 508 577 671 717 350
Operating expenses 1,860
Profit bef. taxes 370
Income taxes 126
Net profit 244

Sales:
Cost of goods sold:
Operating expenses:
Income taxes:
from table C; it does not change from seasonal to level production
from page 5, bottom; 65.16% of sales; CGS under seasonal production (6,300) - Savings under level
production (435)= 5,865
from Exhibit 2, note b and page 5; same as for seasonal plus 100
from Exhibit 2, note c; 34% of profit before taxes

Credit under seasonal production 0 0 0 0 0 0 0 437 1,611 1,608 1,541 880

Credit under level production
Increase of credit
Cost of extra credit 0,9%/month

PLAY TIME TOYS. SUPPLEMENT 2 (TO DO)

PRO FORMA INVENTORY AND TAX ACCOUNTS UNDER LEVEL PRODUCTION (1991)
INVENTORY ACCOUNT
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Initial inventory 530
+ production
- CGS
Final inventory

Production: CGS for 1991 divided by 12 months (5864/12)

CGS: CGS for every month; 65,16% x monthly sales
Final inventory: Inventory at the end of the month

INCOME TAX ACCOUNT

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Initial accrued taxes 80
+ taxes of this month
- tax payments
Final accrued taxes

Initial accrued taxes: accrued taxes at the beginning of the month

Taxes of this month: from the income statement in Supplement 1
Tax payments: from Exhibit 1, note g
 PLAY TIME TOYS. SUPPLEMENT 3 (TO DO)
PRO FORMA BALANCE SHEETS UNDER LEVEL PRODUCTION (1991)

ASSETS 1990 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Cash (min. 175) 175
Acc. receivable 2628 958 234 271 270 250 250 270 1,603 3,113 3,580 3,982 3,063
Inventory 530
Current assets 3,333
Fixed assets net 1070 1,070 1,070 1,070 1,070 1,070 1,070 1,070 1,070 1,070 1,070 1,070 1,070
Total assets 4,403

LIABILITIES & EQUITY

Acc. payable 255
Accrued taxes 80
Credit line 680
Current long-t debt 50 50 50 50 50 50 50 50 50 50 50 50 50
Current liabilities 1,065
Long term debt 400 400 400 400 400 400 375 375 375 375 375 375 350
Equity 2938
Total Liab.&Equity 4,403

SHORT TERM FINANCIAL NEEDS

NFO (1)
WC (2)
CREDIT
(1) NFO = minimum cash (175) + acc. receivable + inventory - acc. payable - accr. taxes
(2) It includes current portion of long term debt because it has been already negotiated; we do not need to negotiate it again.
Negative credit means excess of cash; if it is positive, it indicates need of funds and coincides with the line of credit on the balance sheets.
Cash minimum 175
Acc. receivable 60 days; or sales of this month and previous month
Inventory following inventory account in supplement 2
Fixed assets net constant figure

Acc. payable purchases of this month = 30% x Annual Sales divided by 12 months
Accrued taxes following tax account in supplement 2
Credit line we find out this figure to equilibrate assets and liabilities
Current portion of
long term debt part of the long term debt that matures this year; 50 in this case
Equity stockholders equity of last month plus net income after taxes of this month
1991 % s/ Sales
9,000 100.0%
5,864 65.16%
3,136 34.8%
0.0%
0.0%
0.0%
0.0%
1991

1991

From Income Statements

Exhibit 1, note g
30% Exh.1,e. 30% of sales or=purchases