Jerry's Sound Equipment
Income Statement
For the Year Ended December 31, 2020
Sales (all on credit)		$ 2,0252,025
Cost of goods sold		1,0131,013
Gross margin		1,0121,012
Depreciation expense		3838
General and admin expenses		184184
Selling expense		250250
Earnings before interest and taxes		578578
Interest expense		5555
Earnings before taxes		523523
Tax expense		5858
Earnings after taxes		$ 465465

Jerry's Sound Equipment
Balance Sheet
December 31, 2020
Assets
Cash		$ 3,1903,190
Accounts receivable (net)		1,3471,347
Inventory		1,5051,505
Total current assets		6,0426,042
Property, plant and equipment (net)		2,7662,766
Total assets		8,8088,808
Liabilities and Shareholders' Equity:
Accounts payable		311311
Notes payable		1,2101,210
Total current liabilities		1,5211,521
Long term debt		1,5271,527
Total liabilities		3,0483,048
Shareholders' equity
Preferred stock		129129
Common stock		287287
Retained earnings		5,3445,344
Total shareholders' equity		5,7605,760
Total liabilities and shareholders' equity		$ 8,8088,808

Note 1: Jerry's Sound Equipment pays 1818% of its EAT as dividends

Required: Calculate the required new funds below for each scenario and record the answers in the designated spots. Jerry's profit margin is 2323% and is expected to remain the same as sales increase.

Please provide your answer to the nearest whole number (i.e. 25.2 should be inputted as 25). If your result is negative, enter it with a minus sign (not brackets). Do not enter commas as digit separators (i.e. enter 10000, not 10,000)

1. Jerry's is expecting a 2525% increase in sales next year. No expansion of capital assets is required as they have excess capacity.

$Answer

2. Jerry's is expecting a 2222% increase in sales next year. A $274274 increase in net capital assets is required to support the growth. $Answer

3. Jerry's is expecting a 3434% increase in sales next year. An increase in net capital assets consistent with the increase in sales is required to support the growth.

$Answer

4. Jerry's is expecting a 3333% increase in sales next year. Jerry's is not going to pay a dividend to save cash. No capital expenditures are required. $Answer