You Are Preparing Pro Forma Financial Statements for 2014 Using

Multiple Choice

You are preparing pro forma financial statements for 2014 using the percent-of-sales method.Sales were $100,000 in 2013 and are projected to be $120,000 in 2014.Net income was $5,000 in 2013 and is projected to be $6,000 in 2014.Equity was $45,000 at year-end 2012 and $50,000 at year-end 2013.Assuming that this company never issues new equity,never repurchases equity,and never changes its dividend payout ratio,what would be projected for equity at year-end 2014?

A) $55,000
B) $56,000
C) $60,000
D) Insufficient information is provided to project equity in 2014.