Question
Elvis Inc. has the following balance sheet: Current assets $5,000 Accounts payable $1,000 Notes payable 1,000 Net fixed assets 5,000 Long-term debt 4,000 Common equity
Elvis Inc. has the following balance sheet:
Current assets |
| $5,000 |
| Accounts payable |
| $1,000 |
|
|
|
| Notes payable |
| 1,000 |
Net fixed assets |
| 5,000 |
| Long-term debt |
| 4,000 |
|
|
|
| Common equity |
| 4,000 |
Total assets |
| $10,000 |
| Total liabilities and equity |
| $10,000 |
Business has been slow; therefore, fixed assets are vastly underutilized. Management believes it can triple sales next year with the introduction of a new product. No new fixed assets will be required, and management expects that there will be no earnings retained next year. What is next year's additional financing requirement?
A. a. $3,500
B. b. $4,600
C. c. $5,900
D. d. $8,000 (Doubled Asset side & AC Payable & Notes Payable, 20000 - 12000 = 8000)
E. e. $10,000
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