Farnsbeck Inc. is forecasting a 10% increase in sales next year. Assume the comp
ID: 2438686 • Letter: F
Question
Farnsbeck Inc. is forecasting a 10% increase in sales next year. Assume the company is operating at 100% capacity. The company has 100,000 shares of common stock outstanding and dividends are $0.22 per share.
1. Compute the new level of income for the company.
(A) $53,202 (B) $58,486 (C) $92,927
2. Compute the company's addition to retained earnings for the year.
(A) $23,800 (B) $31,202 (C) $34,567
3. Compute the new level of total assets required.
(A) $1,582,34 (B) $1,272,680 (C) $1,815,808
4. Calculate the new level of current liabilities.
(A) $571,720 (B) $461,341 (C) $592,287
5. Compute the company's new level of retained earnings on the balance sheet.
(A) $257,190 (B) $243,800 (C) $266,674
6. Calculate the level of Additional Funds Needed (AFN) to support the increase in sales.
(A) $57,281 (B) $102,358 (C) $116,356
ASSETS
2015
2014
CASH
$52,000
$57,600
ACCOUNTS RECEIVABLE
402,000
351,200
INVENTORIES
836,000
715,200
TOTAL CURRENT ASSETS
$1,290,000
$1,124,000
GROSS FIXED ASSETS
527,000
491,000
LESS: ACCUMULATED DEPRECIATION
-166,200
-146,200
NET FIXED ASSETS
$360,800
$344,800
TOTAL ASSETS
$1,650,800
$1,468,800
LIABILITIES AND EQUITY
ACCOUNTS PAYABLE
$175,200
$145,600
NOTES PAYABLE
225,000
200,000
ACCRUALS
140,000
136,000
TOTAL CURRENT LIABILITIES
$540,200
$481,600
LONG?TERM DEBT
424,612
323,432
COMMON STOCK
460,000
460,000
RETAINED EARNINGS
225,988
203,768
TOTAL EQUITY
$685,988
$663,768
TOTAL LIABILITIES AND EQUITY
$1,650,800
$1,468,800
INCOME STATEMENTS
2015
2014
SALES
$3,850,000
$3,432,000
COST OF GOODS SOLD
-3,250,000
-2,864,000
GROSS PROFIT
600,000
568,000
OTHER EXPENSES
-430,300
-340,000
DEPRECIATION
-20,000
-18,900
EBIT
$149,700
$209,100
INTEREST EXPENSE
-76,000
-62,500
EBT
$73,700
$146,600
TAXES (40%)
-29,480
-58,640
NET INCOME
$44,220
$87,960
EPS
$0.44
$0.88
ASSETS
2015
2014
CASH
$52,000
$57,600
ACCOUNTS RECEIVABLE
402,000
351,200
INVENTORIES
836,000
715,200
TOTAL CURRENT ASSETS
$1,290,000
$1,124,000
GROSS FIXED ASSETS
527,000
491,000
LESS: ACCUMULATED DEPRECIATION
-166,200
-146,200
NET FIXED ASSETS
$360,800
$344,800
TOTAL ASSETS
$1,650,800
$1,468,800
LIABILITIES AND EQUITY
ACCOUNTS PAYABLE
$175,200
$145,600
NOTES PAYABLE
225,000
200,000
ACCRUALS
140,000
136,000
TOTAL CURRENT LIABILITIES
$540,200
$481,600
LONG?TERM DEBT
424,612
323,432
COMMON STOCK
460,000
460,000
RETAINED EARNINGS
225,988
203,768
TOTAL EQUITY
$685,988
$663,768
TOTAL LIABILITIES AND EQUITY
$1,650,800
$1,468,800
INCOME STATEMENTS
2015
2014
SALES
$3,850,000
$3,432,000
COST OF GOODS SOLD
-3,250,000
-2,864,000
GROSS PROFIT
600,000
568,000
OTHER EXPENSES
-430,300
-340,000
DEPRECIATION
-20,000
-18,900
EBIT
$149,700
$209,100
INTEREST EXPENSE
-76,000
-62,500
EBT
$73,700
$146,600
TAXES (40%)
-29,480
-58,640
NET INCOME
$44,220
$87,960
EPS
$0.44
$0.88
Explanation / Answer
1. A 53202
2. B. 31202
INCOME STATEMENTS 2016 2015 2014 SALES 4235000 $3,850,000 $3,432,000 COST OF GOODS SOLD 3,575,000 -3,250,000 -2,864,000 GROSS PROFIT 660,000 600,000 568,000 OTHER EXPENSES 473,330 -430,300 -340,000 DEPRECIATION 22,000 -20,000 -18,900 EBIT 164,670 $149,700 $209,100 INTEREST EXPENSE -76,000 -76,000 -62,500 EBT 88,670 $73,700 $146,600 TAXES (40%) 35468 -29,480 -58,640 NET INCOME 53,202 $44,220 $87,960 EPS 0.53 $0.44 $0.88Related Questions
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