8. Abbreviated financial statements for Archimedes Levers are shown in Table 29.12 on the next page. If sales increase by 10% in 2011 and all other items, including debt, increase correspondingly, what must be the balancing item? What will be its value?

Income Statement Sales $1,000 (40% of average assets)*
Costs 750 (75% of sales)
Interest 25 (5% of debt at start of year)**
Pretax profit 225 Tax 90 (40% of pretax profit)
Net income $135 Balance Sheet Assets $2,600 Debt $500 Equity 2,100 Total $2,600 Total $2,600 ◗ TABLE 29.11 Financial statements for Drake’s Bowling Alleys, 2011 (figures in thousands). See Problem 7.
* Assets at the end of 2010 were $2,400,000.
** Debt at the end of 2010 was $500,000.
Income Statement Sales $4,000 Costs, including interest 3,500 Net income $500 Balance Sheet, Year-end 2010 2009 2010 2009 Assets $3,200 $2,700 Debt $1,200 $1,033 Equity 2,000 1,667 Total $3,200 $2,700 Total $3,200 $2,700