A Firm Has the Following Account Balances for This Year

question 59

Multiple Choice

A firm has the following account balances for this year. Sales for the year are $500,000. Projected sales for next year are $545,000. The percentage of sales approach is used for pro forma purposes. All balance sheet accounts, except long-term debt and common stock, change according to that approach. The firm plans to decrease the long-term debt balance by $5,000 next year. Retained earnings is expected to increase by $3,500 next year. What is the projected external financing need?
$\begin{array}{lrr} \text {Current assets } &\$48,000\\ \text { Net fixed assets } &\$158,000\\ \text { Current liabilities } &\$48,000\\ \text { Long-term debt } &\$83,000\\ \text { common stock} &\$36,000\\ \text { Retained earnings } &\$40,000\\\end{array}$

• A)$10,520
• B)$14,720
• C)$18,520
• D)$20,720
• E)$25,620

---

Definitions:

Level Of Cooperation

The extent to which individuals or groups within an organization or community are willing to work together towards common goals or interests.

One Leader

A leadership style or situation where a single individual exercises authority and makes decisions for a group or organization.

Team

A group of individuals working together towards a common goal, leveraging various skills, experiences, and perspectives for collective success.

Superordinate Goals

Objectives that are shared and agreed upon by members of different groups or teams, which require cooperative efforts to achieve, thus helping to reduce conflict.