Question

Here are the abbreviated financial statements for Planner’s Peanuts: INCOME STATEMENT, 2019 Sales $ 3,000 Cost...

Here are the abbreviated financial statements for Planner’s Peanuts:

INCOME STATEMENT, 2019
Sales $ 3,000
Cost 2,300
Net income $ 700
BALANCE SHEET, YEAR-END
2018 2019 2018 2019
Assets $ 3,500 $ 4,200 Debt $ 833 $ 2,000
Equity 2,667 2,200
Total $ 3,500 $ 4,200 Total $ 3,500 $ 4,200

a. If sales increase by 20% in 2020 and the company uses a strict percentage of sales planning model (meaning that all items on the income and balance sheet also increase by 20%), what must be the balancing item?

b. What will be the value of this balancing item?

Homework Answers

Answer #1

a.

(a) Net Income next year $ 840 and Equity is increased by (2640-2200) = 440. then balance (840-440) = 400 should be dividend.

Income statement
Current New(20% increase)
Sales 3000 3600 3000*1.2
Cost 2300 2760 2300*1.2
Net Income 700 840 700*1.2
New Balance sheet
Assets (4200*1.2) 5040 Debt(2000*1.2) 2400
Equity (2200*1.2 2640
5040 5040

(b) value of balancing item is $840- $440 = $ 400 (dividend)

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Here are the abbreviated financial statements for Planner’s Peanuts: INCOME STATEMENT, 2019 Sales $ 11,000 Cost...
Here are the abbreviated financial statements for Planner’s Peanuts: INCOME STATEMENT, 2019 Sales $ 11,000 Cost 8,700 Net income $ 2,300 BALANCE SHEET, YEAR-END 2018 2019 2018 2019 Assets $ 10,500 $ 11,500 Debt $ 853 $ 1,000 Equity 9,647 10,500 Total $ 10,500 $ 11,500 Total $ 10,500 $ 11,500 a. If sales increase by 25% in 2020 and the company uses a strict percentage of sales planning model (meaning that all items on the income and balance sheet...
Consider these abbreviated financial statements for Tomkat LLC: Income Statement 2013 Sales (all credit) 2,000,000 Cost...
Consider these abbreviated financial statements for Tomkat LLC: Income Statement 2013 Sales (all credit) 2,000,000 Cost of Goods Sold 1,360,000 Cash Expenses 300,000 Depreciation 120,000 Taxes 120,000 Net Income 100,000 Balance Sheet 2012 2013 Cash 10,000 12,000 Accounts Receivable 300,000 320,000 Inventory 410,000 430,000 Total Current Assets 720,000 762,000 Net Fixed Assets 1,200,000 1,320,000 Total Assets 1,920,000 2,082,000 Accounts Payable 44,000 48,000 Long Term Debt 666,000 724,000 Owners Equity 1,210,000 1,310,000 Total Debt and Equity 1,920,000 2,082,000 (a) Prepare a...
Abbreviated financial statements for Archimedes Levers are shown in the table below. Assume sales and expenses...
Abbreviated financial statements for Archimedes Levers are shown in the table below. Assume sales and expenses increase by 10% in 2017 and all assets and liabilities increase correspondingly. Also assume no new equity is issued and none is repurchased. Income Statement Sales $ 4,000 Costs, including interest 3,500 Net income $ 500 Balance Sheet, Year-End 2016 2015 2016 2015 Net assets $ 3,200 $ 2,700 Debt $ 1,200 $ 1,033 Equity 2,000 1,667 Total $ 3,200 $ 2,700 Total $...
The most recent financial statements for Assouad, Inc., are shown here:   Income Statement Balance Sheet   Sales...
The most recent financial statements for Assouad, Inc., are shown here:   Income Statement Balance Sheet   Sales $3,900     Current assets $3,500     Current liabilities $960     Costs 2,000     Fixed assets 5,800     Long-term debt 3,490     Taxable income $1,900     Equity 4,850     Taxes (24%) 456       Total $9,300       Total $9,300       Net income $1,444   Assets, costs, and current liabilities are proportional to sales. Long-term debt and equity are not. The company maintains a constant 50 percent dividend payout ratio. As with every other firm in its industry, next...
Eagle Sports Supply has the following financial statements. Assume that Eagle’s assets are proportional to its...
Eagle Sports Supply has the following financial statements. Assume that Eagle’s assets are proportional to its sales. INCOME STATEMENT, 2017 Sales $ 1,650 Costs 320 Interest 60 Taxes 270 Net income $ 1,000 BALANCE SHEET, YEAR-END 2016 2017 2016 2017 Assets $ 4,200 $ 4,500 Debt $ 1,500 $ 1,600 Equity 2,700 2,900 Total $ 4,200 $ 4,500 Total $ 4,200 $ 4,500    a. Find Eagle’s required external funds if it maintains a dividend payout ratio of 50% and...
Eagle Sports Supply has the following financial statements. Assume that Eagle’s assets are proportional to its...
Eagle Sports Supply has the following financial statements. Assume that Eagle’s assets are proportional to its sales. INCOME STATEMENT, 2019 Sales $ 1,100 Costs 210 Interest 90 Taxes 160 Net income $ 640 BALANCE SHEET, YEAR-END 2018 2019 2018 2019 Assets $ 3,100 $ 3,400 Debt $ 1,300 $ 1,400 Equity 1,800 2,000 Total $ 3,100 $ 3,400 Total $ 3,100 $ 3,400    a. Find Eagle’s required external funds if it maintains a dividend payout ratio of 60% and...
The most recent financial statements for Schenkel Co. are shown here: Income Statement Balance Sheet   Sales...
The most recent financial statements for Schenkel Co. are shown here: Income Statement Balance Sheet   Sales $ 18,100 Current assets $ 12,200 Debt $ 16,700   Costs 13,900 Fixed assets 29,500 Equity 25,000   Taxable income $ 4,200     Total $ 41,700     Total $ 41,700   Taxes (40%) 1,680     Net income $ 2,520 Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 25 percent dividend payout ratio. No external equity financing is possible. What is the...
The most recent financial statements for Weyland Co. are shown here: INCOME STATEMENT BALANCE SHEET Sales...
The most recent financial statements for Weyland Co. are shown here: INCOME STATEMENT BALANCE SHEET Sales $ 38,800 Current assets $ 23,600 Long-term debt $ 46,500 Costs 29,400 Fixed assets 79,000 Equity 56,100 Taxable income $ 9,400 Total $ 102,600 Total $ 102,600 Taxes (34%) 3,196 Net income $ 6,204 Assets and costs are proportional to sales. The company maintains a constant 20 percent dividend payout ratio and a constant debt−equity ratio. What is the maximum increase in sales that...
The most recent financial statements for Weyland Co. are shown here: INCOME STATEMENT BALANCE SHEET Sales...
The most recent financial statements for Weyland Co. are shown here: INCOME STATEMENT BALANCE SHEET Sales $ 52,200 Current assets $ 22,000 Long-term debt $ 45,500 Costs 42,100 Fixed assets 91,000 Equity 67,500 Taxable income $ 10,100 Total $ 113,000 Total $ 113,000 Taxes (34%) 3,434 Net income $ 6,666 Assets and costs are proportional to sales. The company maintains a constant 20 percent dividend payout ratio and a constant debt−equity ratio. What is the maximum increase in sales that...
The most recent financial statements for Wise Co. are shown here: Income Statement Balance Sheet   Sales...
The most recent financial statements for Wise Co. are shown here: Income Statement Balance Sheet   Sales $ 52,200 Current assets $ 22,000 Long-term debt $ 45,500   Costs 42,100 Fixed assets 91,000 Equity 67,500   Taxable income $ 10,100   Total $ 113,000   Total $ 113,000   Taxes (34%) 3,434             Net income $ 6,666      Assets and costs are proportional to sales. The company maintains a constant 20 percent dividend payout ratio and a constant debt–equity ratio. What is the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT