Question

Projected Spontaneous Liabilities

Smiley Corporation's current sales and partial balance sheet are shown below.

	This year
Sales		$	10,000
Balance Sheet: Liabilities
Accounts payable		$	1,000
Notes payable		$	1,500
Accruals		$	1,600
Total current liabilities		$	4,100
Long-term bonds		$	2,000
Total liabilities		$	6,100
Common stock		$	1,500
Retained earnings		$	2,500
Total common equity		$	4,000
Total liabilities & equity		$	10,100

Sales are expected to grow by 12% next year. Assuming no change in operations from this year to next year, what are the projected spontaneous liabilities? Do not round intermediate calculations. Round your answer to the nearest dollar.

$  

Answer 1

spontaneous liability are accounts payable and accruals that changes in direct proportion to sales, rest explained in image.