Cash Accounts Receivable Inven.
In Year 2, sales are expected to increase by 30%. Management has made the following preliminary decisions.
a. Net property, plant, and equipment will increase from $300 to $1,000.
b. Loans payable will increase from $300 to $500.
c. Gross profit percentage will increase from 30% to 40%.
d. Other operating expenses as a percentage of sales will increase from 18.5% to 25.0%.
e. The income tax rate will decrease from 42.9% to 35.0%.
f. Dividends will increase from $15 to $20.
. ASSUME THAT FORECASTED NET INCOME for YEAR 2 is $100. [Note: The correct amount of forecasted net income for Year 2 is NOT $100, but assume that it is for this question.]
What is the FORECASTED amount of PAID-IN CAPITAL at the end of Year 2? Note: Because enough information is given to estimate all of the other balance sheet items, Paid-in Capital is the “plug” figure.
- Attachment 1
- Attachment 2
CashAccounts ReceivableInventory Property, Plant, and Equipment(net) Total Assets Accounts PayableLoans PayablePaid -in CapitalRetained Earnings Total Liabilities and Equities Beginning Retained Earnings+ Net Income- Dividends Ending Retained Earnings Year 110100 150300 560 100 300 100 560 35 (15)