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Business
Accounting
Assets Cash Accounts receivable Inventory Current assets Capital assets Total assets Balance Sheet $9,000 25,000 30,000 $64,000 85,000 $149,000 Liabilities and Shareholders' Equity Accounts payable Accrued wages Accrued taxes Current liabilities Notes payable Long-term debt Common stock Retained earnings Total liabilities and equity $15,500 2,700 13,800 $32,000 8,500 22,500 35,000 51,000 $149,000 Longbranch is expecting a 20 percent increase in sales next year, and management is concerned about the company's need for external funds. The increase in sales is expected to be carried out without any expansion of capital assets; instead, it will be done through more efficient asset utilization in the existing stores. Of liabilities, only current liabilities vary directly with sales. a. Using a percent-of-sales method, determine whether Longbranch Western Wear has external financing needs. (Input the amount as a positive value.)

Assets Cash Accounts receivable Inventory Current assets Capital assets Total assets Balance Sheet $9,000 25,000 30,000 $64,000 85,000 $149,000 Liabilities and Shareholders' Equity Accounts payable Accrued wages Accrued taxes Current liabilities Notes payable Long-term debt Common stock Retained earnings Total liabilities and equity $15,500 2,700 13,800 $32,000 8,500 22,500 35,000 51,000 $149,000 Longbranch is expecting a 20 percent increase in sales next year, and management is concerned about the company's need for external funds. The increase in sales is expected to be carried out without any expansion of capital assets; instead, it will be done through more efficient asset utilization in the existing stores. Of liabilities, only current liabilities vary directly with sales. a. Using a percent-of-sales method, determine whether Longbranch Western Wear has external financing needs. (Input the amount as a positive value.)

FINANCIAL ACCOUNTING
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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The Longbranch Western Wear Company has the following financial statements, which are representative of the company's historical average. Income Statement Sales Expenses Earnings before interest and taxes Interest Earnings before taxes Taxes Earnings after taxes Dividends Total assets Assets Cash Accounts receivable Inventory Current assets Capital assets $200,000 154,500 $ 45,500 3,500 $ 42,000 12,000 $ 30,000 $ 15,000 $149,000 Balance Sheet Liabilities and Shareholders' Equity $9,000 Accounts payable 25,000 Accrued wages 30,000 Accrued taxes $64,000 Current liabilities 85,000 Notes payable Long-term debt Common stock Retained earnings Total liabilities and equity $15,500 2,700 13,800 $32,000 8,500 22,500 35,000 51,000 $149,000 Longbranch is expecting a 20 percent increase in sales next year, and management is concerned about the company's need for external funds. The increase in sales is expected to be carried out without any expansion of capital assets; instead, it will be done through more efficient asset utilization in the existing stores. Of liabilities, only current liabilities vary directly with sales. in (Click to sele a. Using a percent-of-sales method, determine whether Longbranch Western Wear has external financing needs. (Input the amount as a positive value.) The firm (Click to sele: $
Transcribed Image Text:The Longbranch Western Wear Company has the following financial statements, which are representative of the company's historical average. Income Statement Sales Expenses Earnings before interest and taxes Interest Earnings before taxes Taxes Earnings after taxes Dividends Total assets Assets Cash Accounts receivable Inventory Current assets Capital assets $200,000 154,500 $ 45,500 3,500 $ 42,000 12,000 $ 30,000 $ 15,000 $149,000 Balance Sheet Liabilities and Shareholders' Equity $9,000 Accounts payable 25,000 Accrued wages 30,000 Accrued taxes $64,000 Current liabilities 85,000 Notes payable Long-term debt Common stock Retained earnings Total liabilities and equity $15,500 2,700 13,800 $32,000 8,500 22,500 35,000 51,000 $149,000 Longbranch is expecting a 20 percent increase in sales next year, and management is concerned about the company's need for external funds. The increase in sales is expected to be carried out without any expansion of capital assets; instead, it will be done through more efficient asset utilization in the existing stores. Of liabilities, only current liabilities vary directly with sales. in (Click to sele a. Using a percent-of-sales method, determine whether Longbranch Western Wear has external financing needs. (Input the amount as a positive value.) The firm (Click to sele: $
b. Prepare a pro forma balance sheet with any financing adjustment made to notes payable and excess, if any, shall reduce long term debt. (Input all answers as positive values. Be sure to list the assets and liabilities in order of their liquidity. Do not leave any empty spaces; input a 0 wherever it is required.) Current assets (Click to select) # (Click to select) : 9 (Click to select) Current assets (Click to select) Total assets $ Current ratio Total debt/ assets Balance Sheet Liabilities B (Click to select) (Click to select) (Click to select) # # Current liabilities (Click to select) # (Click to select) # (Click to select) # (Click to select) # Total liabilities and equity $ $ $ $ c. Calculate the current ratio and total debt to assets ratio for each year. (Round the final answers to 2 decimal places.) Year 1 Year 2
Transcribed Image Text:b. Prepare a pro forma balance sheet with any financing adjustment made to notes payable and excess, if any, shall reduce long term debt. (Input all answers as positive values. Be sure to list the assets and liabilities in order of their liquidity. Do not leave any empty spaces; input a 0 wherever it is required.) Current assets (Click to select) # (Click to select) : 9 (Click to select) Current assets (Click to select) Total assets $ Current ratio Total debt/ assets Balance Sheet Liabilities B (Click to select) (Click to select) (Click to select) # # Current liabilities (Click to select) # (Click to select) # (Click to select) # (Click to select) # Total liabilities and equity $ $ $ $ c. Calculate the current ratio and total debt to assets ratio for each year. (Round the final answers to 2 decimal places.) Year 1 Year 2
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