Farnsbeck Inc. is forecasting a 15% increase in sales next year. Assume the company is operating at 85%capacity. The company has 50,000 shares of common stock outstanding. The firm will pay out 60% of its NetIncome in dividends and move 40% into retained earningsBased on the Income statement and balance sheet below answer the following questions.ASSETS20202019ASSETS20202019CASH AND MARKETABLE SECURITIESACCOUNTS RECEIVABLEINVENTORIES25,000116,000 100,000145,000 125,000290,000 250,000362,000 350,00029,000CURRENT ASSETSGROSS PLANT AND EQUIPMENT130,000 100,000232,000 250,000TOTAL ASSETS 522,000 500,000LESS: ACCUMULATED DEPRECIATIONNET FIXED ASSETSLIABILITIES AND EQUITY90,48078,000ACCOUNTS PAYABLEACCRURALSNOTES PAYABLE30,00034,000CURRENT LAIBILITIES 150,700 142,000145,000 140,000TOTAL LIABILITIES 295,700 282,000150,000 150,00034,80025,420LONG TERM DEBTCOMMON STOCK ($1.00 par)76,30068,000RETAINED EARNINGSTOTAL OWNER'S EQUITY 226,300 218,000TOTAL LIABILITIES AND EQUITY 522,000 500,000INCOME STATEMENT20202019NET REVENUES & SALES (100,000 UNITS)COST OF GOODS SOLDGROSS PROFITFIXED OPERATING EXPENSES (pre depreciation)EBITDA Earnings before Intrest, Taxes, Dep & AmoritDEPRECIATION EXPENSEOPERATING INCOME (EBIT)INTERESTINCOME BEFORE TAXES (EBT)INCOME TAXES (40%)NET INCOMEdiv812,000 700,000522,000 450,000290,000 250,000174,200 151,000115,800 99,00030,000- 25,00085,80014,50071,30074,00014,00060,00024,00028,52036,00028,5007,50042,78034,480Retained Earnings 8,300NUMBER OF SHARES OUTSTANDING50,00050,000At 85% capacity what level will sales have to reach for the discretionary items to become spontaneous, that ismove in direct proportion to sales? ISelect ]Compute the new level of net income for the company [Select|Compute the company's additional retained earnings for the year [ Select]Compute the new level of total assets required [Select)Calculate the new level of current liabilities [Select]Compute the company's new level of retained earnings on the balance sheet (Select]Calculate the level of Additional Funds Needed (AFN) to support the increase in sales(Select)

Net income is the term of accounting which is defined as the money that the person gets from the…

ASSETS 2020 2019 ASSETS 2020 2019 29,000 25,000 116,000 100,000 145,000 125,000 290,000 250,000 362,000 350,000 130,000 100,000 232,000 250,000 ASH AND MARKETABLE SECURITIES CCOUNTS RECEIVABLE NVENTORIES CURRENT ASSETS GROSS PLANT AND EQUIPMENT LESS: ACCUMULATED DEPRECIATION NET FIXED ASSETS TOTAL ASSETS 522000 500.000

ASSETS 2020 2019 ASSETS 2020 2019 29,000 25,000 116,000 100,000 145,000 125,000 290,000 250,000 362,000 350,000 130,000 100,000 232,000 250,000 ASH AND MARKETABLE SECURITIES CCOUNTS RECEIVABLE NVENTORIES CURRENT ASSETS GROSS PLANT AND EQUIPMENT LESS: ACCUMULATED DEPRECIATION NET FIXED ASSETS TOTAL ASSETS 522000 500.000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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