With sales of $$400,000,$ MJM$,$ Inc. is operating at capacity but management anticipates that sales will grow $25$ 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:

MJM$,$ Incorporated Balance Sheet as of $12/31/$X$0$

Assets Liabilities and Equity

Cash $ $5,500$ Accounts payable $ $41,000$

Accounts receivable $38,000$ Accruals $51,000$

Inventory $72,000$ Notes payable $0$

$$Current assets $115,500$Current liabilities $92,000$

Plant and equipment $100,000$ Common stock $70,000$

Retained earnings $53,500$

Total assets $ $215,500$ Total liabilities and equity $ $215,500$

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.

Assets and Liabilities Change Forecasted change

Cash

$-$Select$-$

$

Accounts receivable

$-$Select$-$

$

Inventory

$-$Select$-$

$

Plant and equipment

$-$Select$-$

$

Accounts payable

$-$Select$-$

$

Accruals

$-$Select$-$

$

Notes payable

$-$Select$-$

$

How much external finance will the firm need? Round your answer to the nearest dollar.

$

If cash did not increase but could be maintained at $$5,500,$ 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 $$5,500$ the need for external funds would be

$-$Select$-$

by $

$.$

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.

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 $12/31/$X$1$

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 $