Executives at Fruit Corporation forecast increased sales of 10% over the next year.$2,000,000 of assets will change in constant proportion to sales.If the addition to retained earnings is estimated to be $50,000,determine the required external financing.

Question

Quizplus · Accepted Answer

The increase in sales is 10%, so the increase in assets is 10% of $2,000,000, which is $200,000. The addition to retained earnings is $50,000, so the required external financing is $200,000 - $50,000 = $150,000.

Executives at Fruit Corporation Forecast Increased Sales of 10% Over