Question
eBook Problem Walk-Through At year-end 2021, total assets for Arrington Inc. were $1.1 million and accounts payable were $405,000. Sales, which in 2021 were $2.70
eBook Problem Walk-Through At year-end 2021, total assets for Arrington Inc. were $1.1 million and accounts payable were $405,000. Sales, which in 2021 were $2.70 million, are expected to increase by 30% in 2022. Total assets and accounts payable are proportional to sales, and that relationship will be maintained; that is, they will grow at the same rate as sales. Arrington typically uses no current liabilities other than accounts payable. Common stock amounted to $480,000 in 2021, and retained earnings were $400,000. Arrington plans to sell new common stock in the amount of $155,000. The firm's profit margin on sales is 3%; 50% of earnings will be retained.
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