Excel Online Structured Activity: Long$-$Term Financing Needed

At year$-$end $2015,$ Wallace Landscaping's total assets were $$1\mathrm{.}8$ million and its accounts payable were $$320,000.$ Sales, which in $2015$ were $$2\mathrm{.}0$ million, are expected to increase

by $15\%$ in $2016.$ Total assets and accounts payable are proportional to sales, and that relationship will be maintained. Wallace typically uses no current liabilities other than

accounts payable. Common stock amounted to $$460,000$ in $2015,$ and retained earnings were $$250,000.$ Wallace has arranged to sell $$100,000$ of new common stock in $2016$ to

meet some of its financing needs. The remainder of its financing needs will be met by issuing new long$-$term debt at the end of $2016.($Because the debt is added at the end of the

year, there will be no additional interest expense due to the new debt.$)$ Its net profit margin on sales is $7\%,$ and $45\%$ of earnings will be paid out as dividends.

The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below.

Open spreadsheet

a$.$ What was Wallace's total long$-$term debt in $2015?$ Round your answer to the nearest dollar.

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What were Wallace's total liabilities in $2015?$ Do not round intermediate calculations. Round your answer to the nearest dollar.

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b$.$ How much new long$-$term debt financing will be needed in $2016?($Hint: AFN $-$ New stock $=$ New long$-$term debt.$)$ Do not round intermediate calculations. Round your answer

to the nearest dollar.

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