Here are the abbreviated financial statements for Planner's Peanuts: INCOME STATEMENT, 2022 Sales Cost Net income $ 9,500 7,500 $ 2,000 2021 Assets $ 7,500 BALANCE SHEET, YEAR-END 2022 $10,000 Total $ 7,500 $10,000 Debt Equity Total 2021 $ 853 6,647 $ 7,500 2022 $ 1,000 9,000 $10,000 a. If sales increase by 25% in 2023 and the company uses a strict percentage of sales planning model (meaning that all items on the income and balance sheet also increase by 25%), what must be the balancing item? b. What will be the value of this balancing item?
Here are the abbreviated financial statements for Planner's Peanuts: INCOME STATEMENT, 2022 Sales Cost Net income $ 9,500 7,500 $ 2,000 2021 Assets $ 7,500 BALANCE SHEET, YEAR-END 2022 $10,000 Total $ 7,500 $10,000 Debt Equity Total 2021 $ 853 6,647 $ 7,500 2022 $ 1,000 9,000 $10,000 a. If sales increase by 25% in 2023 and the company uses a strict percentage of sales planning model (meaning that all items on the income and balance sheet also increase by 25%), what must be the balancing item? b. What will be the value of this balancing item?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Here are the abbreviated financial statements for Planner's Peanuts:
INCOME STATEMENT, 2022
Sales
Cost
Net income
$ 9,500
7,500
$ 2,000
2021
Assets
$ 7,500
BALANCE SHEET, YEAR-END
2022
$10,000
Total
$ 7,500 $10,000
Debt
Equity
Total
2021
$ 853
6,647
$ 7,500
2022
$ 1,000
9,000
$10,000
a. If sales increase by 25% in 2023 and the company uses a strict percentage of sales planning model (meaning that all items on
the income and balance sheet also increase by 25%), what must be the balancing item?
b. What will be the value of this balancing item?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F86da5f08-37c0-4cb3-a31d-7f0b511c56cd%2Fb0532577-a7dd-4798-893f-021d4c70a391%2Fc8nfx4o_processed.png&w=3840&q=75)
Transcribed Image Text:Here are the abbreviated financial statements for Planner's Peanuts:
INCOME STATEMENT, 2022
Sales
Cost
Net income
$ 9,500
7,500
$ 2,000
2021
Assets
$ 7,500
BALANCE SHEET, YEAR-END
2022
$10,000
Total
$ 7,500 $10,000
Debt
Equity
Total
2021
$ 853
6,647
$ 7,500
2022
$ 1,000
9,000
$10,000
a. If sales increase by 25% in 2023 and the company uses a strict percentage of sales planning model (meaning that all items on
the income and balance sheet also increase by 25%), what must be the balancing item?
b. What will be the value of this balancing item?
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