Question

At year-end 2015, Wallace Landscaping’s total assets were $1.9 million and its accounts payable were $435,000....

At year-end 2015, Wallace Landscaping’s total assets were $1.9 million and its accounts payable were $435,000. Sales, which in 2015 were $2.5 million, are expected to increase by 20% in 2016. Total assets and accounts payable are proportional to sales, and that relationship will be maintained. Wallace typically uses no current liabilities other than accounts payable. Common stock amounted to $465,000 in 2015, and retained earnings were $300,000. Wallace has arranged to sell $80,000 of new common stock in 2016 to meet some of its financing needs. The remainder of its financing needs will be met by issuing new long-term debt at the end of 2016. (Because the debt is added at the end of the year, there will be no additional interest expense due to the new debt.) Its net profit margin on sales is 5%, and 35% of earnings will be paid out as dividends.

How much new long-term debt financing will be needed in 2016? (Hint: AFN - New stock = New long-term debt.) Do not round intermediate calculations. Round your answer to the nearest dollar.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Sales (2500000*(1+20%))    3,000,000
Multiply: net profit margin 5%
Net profit       150,000
Less: Dividends (150000*35%)          52,500
Increase in retained earnings          97,500
Increase in total assets (19000000*20%)       380,000
Less: Increase in accounts payable (435000*20%)          87,000
Less: Increase in retained earnings          97,500
Additional fund needed (AFN)       195,500
Less: New stock issued          80,000
New long term debt issued       115,500
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
At year-end 2015, Wallace Landscaping’s total assets were $1.6 million and its accounts payable were $375,000....
At year-end 2015, Wallace Landscaping’s total assets were $1.6 million and its accounts payable were $375,000. Sales, which in 2015 were $2.5 million, are expected to increase by 15% in 2016. Total assets and accounts payable are proportional to sales, and that relationship will be maintained. Wallace typically uses no current liabilities other than accounts payable. Common stock amounted to $375,000 in 2015, and retained earnings were $320,000. Wallace has arranged to sell $60,000 of new common stock in 2016...
At year-end 2016, Wallace Landscaping’s total assets were $1.4 million, and its accounts payable were $340,000....
At year-end 2016, Wallace Landscaping’s total assets were $1.4 million, and its accounts payable were $340,000. Sales, which in 2016 were $2.1 million, are expected to increase by 25% in 2017. Total assets and accounts payable are proportional to sales, and that relationship will be maintained. Wallace typically uses no current liabilities other than accounts payable. Common stock amounted to $360,000 in 2016, and retained earnings were $200,000. Wallace has arranged to sell $85,000 of new common stock in 2017...
At year-end 2016, Wallace Landscaping’s total assets were $1.7 million, and its accounts payable were $445,000....
At year-end 2016, Wallace Landscaping’s total assets were $1.7 million, and its accounts payable were $445,000. Sales, which in 2016 were $2.1 million, are expected to increase by 20% in 2017. Total assets and accounts payable are proportional to sales, and that relationship will be maintained. Wallace typically uses no current liabilities other than accounts payable. Common stock amounted to $395,000 in 2016, and retained earnings were $240,000. Wallace has arranged to sell $165,000 of new common stock in 2017...
At year-end 2016, Wallace Landscaping’s total assets were $1.7 million, and its accounts payable were $360,000....
At year-end 2016, Wallace Landscaping’s total assets were $1.7 million, and its accounts payable were $360,000. Sales, which in 2016 were $2.2 million, are expected to increase by 30% in 2017. Total assets and accounts payable are proportional to sales, and that relationship will be maintained. Wallace typically uses no current liabilities other than accounts payable. Common stock amounted to $365,000 in 2016, and retained earnings were $265,000. Wallace has arranged to sell $140,000 of new common stock in 2017...
At year-end 2016, Wallace Landscaping’s total assets were $2.0 million, and its accounts payable were $390,000....
At year-end 2016, Wallace Landscaping’s total assets were $2.0 million, and its accounts payable were $390,000. Sales, which in 2016 were $2.2 million, are expected to increase by 20% in 2017. Total assets and accounts payable are proportional to sales, and that relationship will be maintained. Wallace typically uses no current liabilities other than accounts payable. Common stock amounted to $370,000 in 2016, and retained earnings were $240,000. Wallace has arranged to sell $130,000 of new common stock in 2017...
Long-Term Financing Needed At year-end 2016, Wallace Landscaping’s total assets were $1.8 million, and its accounts...
Long-Term Financing Needed At year-end 2016, Wallace Landscaping’s total assets were $1.8 million, and its accounts payable were $325,000. Sales, which in 2016 were $2.2 million, are expected to increase by 25% in 2017. Total assets and accounts payable are proportional to sales, and that relationship will be maintained. Wallace typically uses no current liabilities other than accounts payable. Common stock amounted to $465,000 in 2016, and retained earnings were $205,000. Wallace has arranged to sell $80,000 of new common...
At year-end 2018, Wallace Landscaping’s total assets were $1.76 million, and its accounts payable were $310,000....
At year-end 2018, Wallace Landscaping’s total assets were $1.76 million, and its accounts payable were $310,000. Sales, which in 2018 were $2.9 million, are expected to increase by 20% in 2019. Total assets and accounts payable are proportional to sales, and that relationship will be maintained. Wallace typically uses no current liabilities other than accounts payable. Common stock amounted to $480,000 in 2018, and retained earnings were $280,000. Wallace has arranged to sell $75,000 of new common stock in 2019...
At year-end 2018, Wallace Landscaping’s total assets were $2.28 million, and its accounts payable were $475,000....
At year-end 2018, Wallace Landscaping’s total assets were $2.28 million, and its accounts payable were $475,000. Sales, which in 2018 were $2.9 million, are expected to increase by 20% in 2019. Total assets and accounts payable are proportional to sales, and that relationship will be maintained. Wallace typically uses no current liabilities other than accounts payable. Common stock amounted to $540,000 in 2018, and retained earnings were $265,000. Wallace has arranged to sell $190,000 of new common stock in 2019...
At year-end 2018, Wallace Landscaping’s total assets were $2.00 million, and its accounts payable were $325,000....
At year-end 2018, Wallace Landscaping’s total assets were $2.00 million, and its accounts payable were $325,000. Sales, which in 2018 were $3.5 million, are expected to increase by 30% in 2019. Total assets and accounts payable are proportional to sales, and that relationship will be maintained. Wallace typically uses no current liabilities other than accounts payable. Common stock amounted to $520,000 in 2018, and retained earnings were $340,000. Wallace has arranged to sell $130,000 of new common stock in 2019...
At year-end 2018, Wallace Landscaping’s total assets were $2.16 million, and its accounts payable were $485,000....
At year-end 2018, Wallace Landscaping’s total assets were $2.16 million, and its accounts payable were $485,000. Sales, which in 2018 were $2.7 million, are expected to increase by 25% in 2019. Total assets and accounts payable are proportional to sales, and that relationship will be maintained. Wallace typically uses no current liabilities other than accounts payable. Common stock amounted to $380,000 in 2018, and retained earnings were $390,000. Wallace has arranged to sell $140,000 of new common stock in 2019...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT