Here are the abbreviated financial statements for Planner's Peanuts: INCOME STATEMENT, 2019 $2,500 Sales 1,900 $ 600 Cost Net income BALANCE SHEET, YEAR-END 2019 2018 $ 853 Equity _ 1,647 2019 $1,000 2018 Assets $2,500 $3,600 Debt 2,600 Total $2,500 $3,600 Total $2,500 $3,600 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? Balancing item a. b. Value

Here are the abbreviated financial statements for Planner's Peanuts: INCOME STATEMENT, 2019 $2,500 Sales 1,900 $ 600 Cost Net income BALANCE SHEET, YEAR-END 2019 2018 $ 853 Equity _ 1,647 2019 $1,000 2018 Assets $2,500 $3,600 Debt 2,600 Total $2,500 $3,600 Total $2,500 $3,600 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? Balancing item a. b. Value

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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Concept explainers

Contingent Liabilities and Provisions

A contingent liability can be defined as a liability the occurrence of which is dependent upon the happening of an uncertain future event. It is generally recorded in the books only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly.

Question

Here are the abbreviated financial statements for Planner's Peanuts:
INCOME STATEMENT,
2019
$2,500
1,900
Sales
Cost
Net income
$
600
BALANCE SHEET, YEAR-END
2018
2019
2018
2019
$1,000
2,600
Assets
$2,500
$3,600
Debt
2$
853
Equity
1,647
Total
$2,500
$3,600
Total
$2,500
$3,600
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?
Balancing item
а.
b.
Value

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