oyou have completed so far. It 2 Problem 18-10 Percentage of Sales Models (LO2)
ID: 2579576 • Letter: O
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oyou have completed so far. It 2 Problem 18-10 Percentage of Sales Models (LO2) 20 points Here are the abbreviated financial statements for Planners Peanuts: Sales Cost Net income $7,500 5.900 $1,600 BALANCE SHEET, YEAR-END 2016 2017 2016 2017 $3,500 s,000Debt$ 853 $1.000 Equity 2,647 7,000 otal 3.500 $8,000 Assets Total $3,500 8,000 a. If sales increase by 25% in 2016 and the company uses a strict percentage of sales planning model (meaning that all items on the income and balance sheet also increase by 25%), what must be the balancing item? Debt Cost Dividends Net income Sales b. What will be the value of this balancing item? Prey 2 of 8 Next >Explanation / Answer
The value of balancing item is dividend
Net increase by (25%) $2000
Equity increases by (25%) $2125
Dividends must be $125.
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