1. Use the percentage of sales forecasting method to compute the additional financing needed by Lambrechts Specialty Shops, Inc. (LSS), if sales are expected to increase from a current level of $20 million to a new level of $25 million over the coming year. LSS expects earnings after taxes to equal $1 million over the next year. LSS intends to pay a $300,000 dividend next year. The current year balance sheet for LSS is as follows: Balance Sheet as of December 31, 20X3cash$1,000,000 Accounts payable$3,000,000Accounts receivable1,500,000 Notes payable3,000,000inventories6,000,000 Long-term debt2,000,000Net fixed assets3,000,000 Stockholders' equity3,500,00Total Assets$11,500,000 Total liabilities and equity$11,500,000All assets, except "cash", are expected to vary proportionately with sales. Of total liabilitiesand equity, only "accounts payable" is expected to vary proportionately with sales.

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Answered: Balance Sheet as of December 31, 20X3…

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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1. Use the percentage of sales forecasting method to compute the additional financing needed by Lambrechts Specialty Shops, Inc. (LSS), if sales are expected to increase from a current level of $20 million to a new level of $25 million over the coming year. LSS expects earnings after taxes to equal $1 million over the next year. LSS intends to pay a $300,000 dividend next year. The current year balance sheet for LSS is as follows:

Balance Sheet as of December 31, 20X3
cash
$1,000,000 Accounts payable
$3,000,000
Accounts receivable
1,500,000 Notes payable
3,000,000
inventories
6,000,000 Long-term debt
2,000,000
Net fixed assets
3,000,000 Stockholders' equity
3,500,00
Total Assets
$11,500,000 Total liabilities and equity
$11,500,000
All assets, except "cash", are expected to vary proportionately with sales. Of total liabilities
and equity, only "accounts payable" is expected to vary proportionately with sales.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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