Question
1a) Smiley Corporation's current sales and partial balance sheet are shown below. This year Sales $ 10,000 Balance Sheet: Liabilities Accounts payable $ 1,500 Notes
1a) Smiley Corporation's current sales and partial balance sheet are shown below.
| This year | ||||
| Sales | $ | 10,000 | ||
| Balance Sheet: Liabilities | ||||
| Accounts payable | $ | 1,500 | ||
| Notes payable | $ | 3,000 | ||
| Accruals | $ | 1,200 | ||
| Total current liabilities | $ | 5,700 | ||
| Long-term bonds | $ | 2,000 | ||
| Total liabilities | $ | 7,700 | ||
| Common stock | $ | 1,500 | ||
| Retained earnings | $ | 2,000 | ||
| Total common equity | $ | 3,500 | ||
| Total liabilities & equity | $ | 11,200 | ||
Sales are expected to grow by 14% 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.
$
Financing Deficit
Garlington Technologies Inc.'s 2019 financial statements are shown below:
Income Statement for December 31, 2019
| Sales | $4,000,000 |
| Operating costs | 3,200,000 |
| EBIT | $ 800,000 |
| Interest | 120,000 |
| Pre-tax earnings | $ 680,000 |
| Taxes (25%) | 170,000 |
| Net income | 510,000 |
| Dividends | $ 190,000 |
Balance Sheet as of December 31, 2019
| Cash | $ 160,000 | Accounts payable | $ 360,000 | |
| Receivables | 360,000 | Line of credit | 0 | |
| Inventories | 720,000 | Accruals | 200,000 | |
| Total CA | $1,240,000 | Total CL | $ 560,000 | |
| Fixed assets | 4,000,000 | Long-term bonds | 1,000,000 | |
| Total Assets | $5,240,000 | Common stock | 1,100,000 | |
| RE | 2,580,000 | |||
| Total L&E | $5,240,000 |
Suppose that in 2020 sales increase to $4.4 million and that 2020 dividends will increase to $118,000. Forecast the financial statements using the forecasted financial statement method. Assume the firm operated at full capacity in 2019. The long-term bonds have an interest rate of 8%. New financing will be with a line of credit. Assume it will be added at the end of the year. Cash does not earn any interest income. Enter your answers as positive values. Do not round intermediate calculations. Round your answers to the nearest dollar.
| Garlington Technologies Inc. Pro Forma Income Statement December 31, 2020 | |||
| Sales | $ | ||
| Operating costs | $ | ||
| EBIT | $ | ||
| Interest | $ | ||
| Pre-tax earnings | $ | ||
| Taxes (25%) | $ | ||
| Net income | $ | ||
| Dividends: | $ | ||
| Addition to RE: | $ | ||
| Garlington Technologies Inc. Pro Forma Balance Statement December 31, 2020 | |||
| Cash | $ | ||
| Receivables | $ | ||
| Inventories | $ | ||
| Total current assets | $ | ||
| Fixed assets | $ | ||
| Total assets | $ | ||
| Accounts payable | $ | ||
| Line of credit | $ | ||
| Accruals | $ | ||
| Total current liabilities | $ | ||
| LT bonds | $ | ||
| Common stock | $ | ||
| Retained earnings | $ | ||
| Total L&E | $ | ||
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
The Technology Procurement Handbook A Practical Guide To Digital Buying
Authors: Sergii Dovgalenko
1st Edition
1789662125, 978-1789662122
