Problem 23-04

BBP, Inc., with sales of $700,000, has the following balance sheet:

BBP, Incorporated Balance Sheet as of 12/31/X0
Assets				Liabilities and Equity
Cash	$	42,000		Accounts payable	$	21,000
Accounts receivable		70,000		Accruals		35,000
Inventory		98,000		Notes payable		45,000
Current assets		210,000		Current liabilities		101,000
Fixed assets		195,000		Common stock		100,000
				Retained earnings		204,000
Total assets	$	405,000		Total liabilities and equity	$	405,000

The firm earns 16 percent on sales and distributes 25 percent of its earnings. Using the percent of sales, determine whether the firm will need external funds and forecast the new balance sheet for sales of $910,000 assuming that cash changes with sales and that the firm is not operating at capacity. Use newly issued short-term debt to cover any needs for additional finance. If the firm has excess funds, add them to cash. Round your answers to the nearest dollar. Enter your answers as positive values.

The firm -Select one -will need external // will have excess funds of $ _____

BBP, Incorporated Balance Sheet as of 12/31/X1
Assets				Liabilities and Equity
Cash	$			Accounts payable	$
Accounts receivable				Accruals
Inventory				Notes payable
Current assets				Current liabilities
Fixed assets				Common stock
				Retained earnings
Total assets	$			Total liabilities and equity	$

Would your answers be different if the firm distributed all of its earnings? Round your answers to the nearest dollar. Enter your answer as a positive value.

If management distributed all the firm's earnings, it Select one: will need external // will have excess funds of $_____ .