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

Question

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

Quizplus · Accepted Answer

The Answer of 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

A Firm Has the Following Account Balances for This Year