CN is North America's fifth largest railroad.CN is forecasting its financial statements for Year 7.Selected financial information for Year 6 is provided in the table.What is long term debt (the plug variable)for the forecasted year? To forecast current liabilities payable use the percentage of sales method based on Year 6 figures.Assume that no dividends are paid in Year 7.
Selected Financial Information
CN Railway Company ($000'000s)

Question

Quizplus · Accepted Answer

Calculate Current Liabilities as % of sales from Year 6: 34.9264% Current Liabilities = (6,721) × (0.349264) = $2,283 Long Term Debt₇ = Total Assets - Total Shareholders' Equity - Total Current Liabilities Total Shareholders' Equity₇ = Common Stock₇ + Retained Earnings₇ Retained Earnings₇ = Retained Earnings₆ + Net Income₇ - Dividends₇ Retained Earnings₇ = $2,762 + 655 = $3,417 Total Shareholders' Equity₇ = 3,558 + 3,417 = $6,975 Long Term Debt₇ = $20,086 - $6,975 - $2,347 = $10,764

CN Is North America's Fifth Largest Railroad