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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