Question

Decker Enterprises Below are the simplified current and projected financial statements for Decker Enterprises. All of Decker's assets are operating assets. All of Decker's current liabilities are operating liabilities. Income statement Current Projected Sales na 1,500 Costs na 1,080 Profit before tax na 420 Taxes (25%) na 105 Net income na 315 Dividends na 95 Balance sheets Current Projected Current Projected Current assets 100 115 Current liabilities 70 81 Net fixed assets 1,200 1,440 Long-term debt 300 360 Common stock 500 500 Retained earnings 430 650 Based on the projections, Decker will have

a. a financing surplus of $255

b. a financing deficit of $255

c. a financing surplus of $36

d. zero financing surplus or deficit

e. a financing deficit of $36

Answer 1

Correct option is "C"- a financing surplus of $36

Assets		Liabilities and stockholders equity
current asset	115	current liabilities	81
Net fixed asset	1440	long term debt	360
		common stock	500
		Retained earning	650
Total asset	1555	Total liabiities and stockholders equity	1591

Financial deficit/(surplus) =Total asset - Total liabiities and stockholders equity

                      = 1555 - 1591

                     = -36 surplus