A Firm with Sales of $1000 Has the Following Balance $X Y Z$

question 17

Essay

A firm with sales of $1000 has the following balance sheet. Corporation $X Y Z$
$\text { Balance Sheet as of June 30, 20XX }$
$\begin{array}{lcl}\text { Assets } && \text { Liabilities and Equity } \\\hline\text { Accounts receivable } & \$ 200& \text { Accounts payable } & \$ 200 \\\text { Inventory } & 400 &\text { Long-term debt } & 300 \\\text { Plant } & 400 &\text { Equity } & 500\\&\$1,000&&\$1,000\end{array}$
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If the firm earns 10 percent after taxes on sales and pays no dividends,
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a. Determine the entries for a new balance sheet for sales of $1,500 using the following estimated equations:
accounts receivable = $120 + 0.21Sales
inventory = $331 + 0.37Sales
accounts payable = $132 + 0.29Sales.
a. If necessary, issue new stock to cover any external financing needs. If the firm has excess funds, retire the accounts payable.
b. Will the firm need external financing?
​c. Construct a new balance sheet using the estimates obtained in

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Definitions:

Parasitism

Symbiotic relationship in which one species (the parasite) benefits in terms of growth and reproduction, to the detriment of the other species (the host).

Mutualism

Symbiotic relationship in which both species benefit in terms of growth and reproduction.

Biosphere

Zone of air, land, and water at the surface of the Earth, in which living organisms are found.

Lithosphere

The rigid outer layer of the Earth, consisting of the crust and the upper mantle, involved in plate tectonics and continental drift.