(12-3)

Projected Spontaneous Liabilities

Smiley Corporations current sales and partial balance sheet are shown here. Sales are expected to grow by 10% next year. Assuming no change in operations from this year to next year, what are the projected spontaneous liabilities?

	This year
Sales	$ 10,000
Balance Sheet: Liabilities
Accounts payable	$ 1,000
Notes payable	$ 2,000
Accruals	$ 1,000
Total current liabilities	$ 4,000
Long-term bonds	$ 2,000
Total liabilities	$ 6,000
Common stock	$ 1,000
Retained earnings	$ 3,000
Total common equity	$ 4,000
Total liabilities & equity	$ 10,000

I need help I do not understand how I get this number.

Answer

$2,970.