Suppose That the 2013 Actual and 2014 Projected Financial Statements

question 61

Multiple Choice

Suppose that the 2013 actual and 2014 projected financial statements for Cypress Corp.are initially as shown in the following tables.In these tables,sales are projected to rise 15 percent in the coming year,and the components of the income statement and balance sheet that are expected to increase at the same 15 percent rate as sales are indicated with an italics font.Assuming that Cypress Corp.wants to cover the AFN with 35 percent equity,35 percent long-term debt,and the remainder from notes payable,what amount of additional funds will they need to raise if debt carries a 9 percent interest rate?

• A)$4,165 equity; $4,165 long-term debt; $3,570 notes payable
• B)$4,165 equity; $3,570 notes payable; $4,165 long-term debt
• C)$5,850 equity; $5,850 long-term debt; $0 notes payable
• D)None of these answers is correct

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Definitions:

Equivalent Unit

A concept used in cost accounting to represent a partially finished unit in terms of a full finished unit.

Process Costing

A costing method used in manufacturing where costs are assigned to batches or process levels, suitable for homogeneous products.

Service Provider

A company or individual that offers specific professional services or products to customers or businesses.

Indirect Materials

Materials used in the production process that cannot be directly linked to specific products or jobs, such as lubricants and cleaning supplies in a manufacturing facility.