Here are the abbreviated financial statements for Planner’s Peanuts: INCOME STATEMENT, 2019 Sales $ 5,000 Cost 3,900 Net income $ 1,100 BALANCE SHEET, YEAR-END 2018 2019 2018 2019 Assets $ 7,500 $ 12,100 Debt $ 833 $ 1,000 Equity 6,667 11,100 Total $ 7,500 $ 12,100 Total $ 7,500 $ 12,100 a. If sales increase by 10% in 2020 and the company uses a strict percentage of sales planning model (meaning that all items on the income and balance sheet also increase by 10%), what must be the balancing item? b. What will be the value of this balancing item?
Here are the abbreviated financial statements for Planner’s Peanuts: INCOME STATEMENT, 2019 Sales $ 5,000 Cost 3,900 Net income $ 1,100 BALANCE SHEET, YEAR-END 2018 2019 2018 2019 Assets $ 7,500 $ 12,100 Debt $ 833 $ 1,000 Equity 6,667 11,100 Total $ 7,500 $ 12,100 Total $ 7,500 $ 12,100 a. If sales increase by 10% in 2020 and the company uses a strict percentage of sales planning model (meaning that all items on the income and balance sheet also increase by 10%), what must be the balancing item? b. What will be the value of this balancing item?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Here are the abbreviated financial statements for Planner’s Peanuts:
| INCOME STATEMENT, 2019 | |||
| Sales | $ | 5,000 | |
| Cost | 3,900 | ||
| Net income | $ | 1,100 | |
| BALANCE SHEET, YEAR-END | |||||||||||||||||||
| 2018 | 2019 | 2018 | 2019 | ||||||||||||||||
| Assets | $ | 7,500 | $ | 12,100 | Debt | $ | 833 | $ | 1,000 | ||||||||||
| Equity | 6,667 | 11,100 | |||||||||||||||||
| Total | $ | 7,500 | $ | 12,100 | Total | $ | 7,500 | $ | 12,100 | ||||||||||
a. If sales increase by 10% in 2020 and the company uses a strict percentage of sales planning model (meaning that all items on the income and balance sheet also increase by 10%), what must be the balancing item?
b. What will be the value of this balancing item?
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