a. If sales increase by 20% 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 20%), what must be the balancing item? b. What will be the value of this balancing item?
a. If sales increase by 20% 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 20%), 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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Transcribed Image Text:**Financial Statements for Planner’s Peanuts – Educational Guide**
---
### Income Statement, 2019
- **Sales:** $10,500
- **Cost:** $8,300
- **Net Income:** $2,200
---
### Balance Sheet, Year-End
#### 2018
- **Assets:** $9,500
- **Debt:** $853
- **Equity:** $8,647
#### 2019
- **Assets:** $13,200
- **Debt:** $1,000
- **Equity:** $12,200
_Total Assets and Liabilities:_
- **Total Assets:** $9,500 (2018), $13,200 (2019)
- **Total Liabilities and Equity:** $9,500 (2018), $13,200 (2019)
---
### Additional Information
**a.** If sales increase by 20% 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 20%), what must be the balancing item?
**b.** What will be the value of this balancing item?
#### Table for Calculation:
| a. Balancing item | ______________________ |
|---------------------|------------------------|
| b. Value | ______________________ |
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