A Firm Has the Following Account Balances for This Year

question 78

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?

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

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