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4. Horrock’s Inc. is a small engineering corporation that surveys land for d

4. Horrock’s Inc. is a small engineering corporation that surveys land for d

4. Horrocks Inc. is a small engineering corporation that surveys land for development. The company has grown rapidly over the past few years, and management has
to decide whether to hire new engineers and open new offices. To assess future growth, the companys accountant has gathered budgeted information for the coming
year, 2013: Ending common stock balance $ 48,000 Beginning retained earnings balance 34,000 Ending accounts payable balance 6,000 Ending equipment balance 159,000
Ending accumulated depreciation balance 24,000 Ending accounts receivable balance 19,500 Ending cash balance 18,000 Interest expense 3,000 Salary expense 105,000
Other expenses (including depreciation) 37,500 Service revenue 300,000 Income tax rate 33% Income taxes due on the coming years net income will be paid during
2014. Dividends of $70,000 are to be declared and paid during 2013. a. Prepare a pro-forma income statement and balance sheet for 2013 from which the company
president can make expansion decisions. b. On the basis of this information, is the company very profitable? How should this level of profits affect its expansion
plans?

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