Problem 23-05 with sales of $400,000, MJM, Inc. is operating at capacity but management anticipates that sales will grow 30 percent during the coming year. The company earns 10 percent on sales and distributes 50 percent of earnings to stockholders. Its current balance sheet is as follows: $ 8,000 $ 53,000 50,000 MJM, Incorporated Balance Sheet as of 12/31/X0 Assets Llabilities and Equity Cash Accounts payable Accounts receivable 31,000 Accruals Inventory 66,000 Notes payable Current assets 105,000 Current liabilities Plant and equipment 100,000 Common stock Retained earnings Total assets $ 205,000 Total liabilities and equity 103,000 50,000 52,000 $ 205,000 Tips a. In addition to cash, which assets and liabilities will increase with the increase in sales and by how much if the percent of sales is used to forecast the increases? If assets or liabilities does not change enter zero as a forecasted change. Do not round intermediate calculations. Round your answers to the nearest dollar. Forecasted change Assets and Liabilities Cash Accounts receivable Inventory Plant and equipment Accounts payable Accruals Notes payable Change -Select- -Select- Select- -Select- Select -Select- -Select b. How much external finance will the firm need? Round your answer to the nearest dollar. C. If cash did not increase but could be maintained at $8,000, what impact would the lower cash have on the firm's need for external finance? Round your answer to the nearest dollar. Enter your answer as a positive value select by $ If cash remained at $8,000 the need for external funds would be X Ch 23: End-of-Chapter Problems - Forecasting Plant and equipment Accounts payable -Select- Accruals Notes payable -Select b. How much external finance will the firm need? Round your answer to the nearest dollar. c. If cash did not increase but could be maintained at $8,000, what impact would the lower cash have on the firm's need for external finance? Round your answer to the nearest dollar. Enter your answer as a positive value. If cash remained at $8,000 the need for external funds would be select by $ d. If the firm distributed 25 percent (2) instead of 50 percent (1) of its earnings, would it need external finance? The net increase in retained earnings comparing (2) with (1) is $ It -Select- cover the external funds needed. e. Construct a new balance sheet assuming that cash increases with the increase in sales and the firm distributes 50 percent of its earnings to stockholders. If the firm needs external finance, acquire the funds by issuing a short-term note to a commercial bank. Do not round Intermediate calculations. Round your answers to the nearest dollar. MJM, 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 Plant and equipment Common stock Retained earnings Total assets Total liabilities and equity $ Grade In Now Save & Continue
