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Cash Accounts Receivable Inven

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)

Cash Accounts Receivable Inven


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