You have a current balance sheet with liabilities of $50,000 and assets of $75,000. You estimate that you will have to purchase a new vehicle next year for $20,000. You believe you will be able to pay 20% down and can finance the remainder through your bank. If nothing else changes, your pro forma balance sheet will show assets of and liabilities of .
A) $95,000; $66,000
B) $95,000; $70,000
C) $91,000; $66,000
D) $91,000; $54,000

Question

Quizplus · Accepted Answer

The new vehicle purchase will increase assets by $20,000, making them $95,000. The down payment is 20% of $20,000, which is $4,000, leaving $16,000 to be financed. This increases liabilities to $66,000 ($50,000 + $16,000).

You Have a Current Balance Sheet with Liabilities of $50,000