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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
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
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**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 | ______________________ |
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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