A firm has the following account balances for this year.Sales for the year are $420,000.Projected sales for next year are $441,000.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 $23,500 next year.Retained earnings is expected to increase by $5,400 next year.What is the projected external financing need?

A) -$14,150
B) -$6,850
C) $32,850
D) $36,000
E) $56,350

Question

A firm has the following account balances for this year.Sales for the year are $420,000.Projected sales for next year are $441,000.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 $23,500 next year.Retained earnings is expected to increase by $5,400 next year.What is the projected external financing need?

A) -$14,150 
B) -$6,850 
C) $32,850 
D) $36,000 
E) $56,350

Quizplus · Accepted Answer

11ea6d0e_c3d0_4fd6_b3c7_6d327860bdd8_TB1223_00

A Firm Has the Following Account Balances for This Year