Question
In: Finance
Problem 12-05 Long-Term Financing Needed At year-end 2016, Wallace Landscaping’s total assets were $1.7 million, and...
Problem 12-05
Long-Term Financing Needed
At year-end 2016, Wallace Landscaping’s total assets were $1.7 million, and its accounts payable were $305,000. Sales, which in 2016 were $2.0 million, are expected to increase by 15% in 2017. Total assets and accounts payable are proportional to sales, and that relationship will be maintained. Wallace typically uses no current liabilities other than accounts payable. Common stock amounted to $465,000 in 2016, and retained earnings were $315,000. Wallace has arranged to sell $110,000 of new common stock in 2017 to meet some of its financing needs. The remainder of its financing needs will be met by issuing new long-term debt at the end of 2017. (Because the debt is added at the end of the year, there will be no additional interest expense due to the new debt.) Its net profit margin on sales is 6%, and 40% of earnings will be paid out as dividends.
What was Wallace's total long-term debt in 2016? Do not round
intermediate calculations. Round your answer to the nearest
dollar.
$
What were Wallace's total liabilities in 2016? Do not round
intermediate calculations. Round your answer to the nearest
dollar.
$
How much new long-term debt financing will be needed in 2017? (Hint: AFN - New stock = New long-term debt.) Do not round intermediate calculations. Round your answer to the nearest dollar.
$
Solutions
Expert Solution
| Wallace Landscaping’s | ||||
| Total Assets | $ 17,00,000.00 | |||
| Accounts Payable | $ 3,05,000.00 | |||
| Sales | $ 20,00,000.00 | |||
| New Sales($2000000*1.15) | $ 23,00,000.00 | |||
| Increase Sales | $ 3,00,000.00 | |||
| Common Stock | $ 4,65,000.00 | |||
| Retained Earnings | $ 3,15,000.00 | |||
| Net Profit Margin | 6% | |||
| Payout Ratio | 40% | |||
| Total Long Term Debts=Total Assets-Accounts Payable-(Common Stock+Retained Earnings) | ||||
| Total Long Term Debts=1700000-305000-(465000+315000) | $ 6,15,000.00 | |||
| Total Liabilities | ||||
| Long Term Debt | $ 6,15,000.00 | |||
| Shart Term Debts | $ 3,05,000.00 | |||
| Total Liabilities | $ 9,20,000.00 | |||
| A0= | $ 17,00,000.00 | |||
| ?S= | $ 3,00,000.00 | |||
| Lo= | $ 3,05,000.00 | |||
| S1= | $ 23,00,000.00 | |||
| S0= | $ 20,00,000.00 | |||
| PM= | 6% | |||
| b=(1-40%) | 60% | |||
| AFN= Ao* ?S/So- Lo * ?S/ So - S1 * PM * b | ||||
| 1700000*(300000/2000000)-305000*(300000/2000000)-2300000*6%*60% | ||||
| AFN | $ 1,26,450.00 | |||
| New Long Term Debts=AFN-New Stock=($126450-$110000) | $ 16,450.00 | |||
jeff jeffy answered 2 years agoRelated Solutions
Problem 12-05 Long-Term Financing Needed At year-end 2016, Wallace Landscaping’s total assets were $1.7 million, and...
Problem 12-05 Long-Term Financing Needed At year-end 2016,
Wallace Landscaping’s total assets were $1.7 million, and its
accounts payable were $350,000. Sales, which in 2016 were $2.8
million, are expected to increase by 30% in 2017. Total assets and
accounts payable are proportional to sales, and that relationship
will be maintained. Wallace typically uses no current liabilities
other than accounts payable. Common stock amounted to $405,000 in
2016, and retained earnings were $235,000. Wallace has arranged to
sell $90,000 of...
Long-Term Financing Needed At year-end 2016, Wallace Landscaping’s total assets were $1.7 million, and its accounts...
Long-Term Financing Needed
At year-end 2016, Wallace Landscaping’s total assets were $1.7
million, and its accounts payable were $345,000. Sales, which in
2016 were $2.9 million, are expected to increase by 20% in 2017.
Total assets and accounts payable are proportional to sales, and
that relationship will be maintained. Wallace typically uses no
current liabilities other than accounts payable. Common stock
amounted to $450,000 in 2016, and retained earnings were $290,000.
Wallace has arranged to sell $60,000 of new common...
Long-Term Financing Needed At year-end 2016, Wallace Landscaping’s total assets were $1.9 million, and its accounts...
Long-Term Financing Needed
At year-end 2016, Wallace Landscaping’s total assets were $1.9
million, and its accounts payable were $405,000. Sales, which in
2016 were $3.0 million, are expected to increase by 30% in 2017.
Total assets and accounts payable are proportional to sales, and
that relationship will be maintained. Wallace typically uses no
current liabilities other than accounts payable. Common stock
amounted to $440,000 in 2016, and retained earnings were $220,000.
Wallace has arranged to sell $75,000 of new common...
Long-Term Financing Needed At year-end 2019, Wallace Landscaping’s total assets were $2.34 million, and its accounts...
Long-Term Financing Needed
At year-end 2019, Wallace Landscaping’s total assets were $2.34
million, and its accounts payable were $380,000. Sales, which in
2019 were $3.2 million, are expected to increase by 10% in 2020.
Total assets and accounts payable are proportional to sales, and
that relationship will be maintained. Wallace typically uses no
current liabilities other than accounts payable. Common stock
amounted to $645,000 in 2019, and retained earnings were $310,000.
Wallace has arranged to sell $70,000 of new common...
At year-end 2016, Wallace Landscaping’s total assets were $1.7 million, and its accounts payable were $415,000....
At year-end 2016, Wallace Landscaping’s total assets were $1.7
million, and its accounts payable were $415,000. Sales, which in
2016 were $2.2 million, are expected to increase by 30% in 2017.
Total assets and accounts payable are proportional to sales, and
that relationship will be maintained. Wallace typically uses no
current liabilities other than accounts payable. Common stock
amounted to $415,000 in 2016, and retained earnings were $315,000.
Wallace has arranged to sell $95,000 of new common stock in 2017...
At year-end 2015, Wallace Landscaping’s total assets were $1.7 million and its accounts payable were $370,000....
At year-end 2015, Wallace Landscaping’s total assets were $1.7
million and its accounts payable were $370,000. Sales, which in
2015 were $2.8 million, are expected to increase by 30% in 2016.
Total assets and accounts payable are proportional to sales, and
that relationship will be maintained. Wallace typically uses no
current liabilities other than accounts payable. Common stock
amounted to $395,000 in 2015, and retained earnings were $330,000.
Wallace has arranged to sell $160,000 of new common stock in 2016...
At year-end 2016, Wallace Landscaping’s total assets were $1.9 million, and its accounts payable were $335,000....
At year-end 2016, Wallace Landscaping’s total assets were $1.9
million, and its accounts payable were $335,000. Sales, which in
2016 were $2.0 million, are expected to increase by 30% in 2017.
Total assets and accounts payable are proportional to sales, and
that relationship will be maintained. Wallace typically uses no
current liabilities other than accounts payable. Common stock
amounted to $470,000 in 2016, and retained earnings were $340,000.
Wallace has arranged to sell $80,000 of new common stock in 2017...
At year-end 2016, Wallace Landscaping’s total assets were $1.9 million, and its accounts payable were $335,000....
At year-end 2016, Wallace Landscaping’s total assets were $1.9
million, and its accounts payable were $335,000. Sales, which in
2016 were $2.0 million, are expected to increase by 30% in 2017.
Total assets and accounts payable are proportional to sales, and
that relationship will be maintained. Wallace typically uses no
current liabilities other than accounts payable. Common stock
amounted to $470,000 in 2016, and retained earnings were $340,000.
Wallace has arranged to sell $80,000 of new common stock in 2017...
At year-end 2016, Wallace Landscaping’s total assets were $1.9 million and its accounts payable were $390,000....
At year-end 2016, Wallace Landscaping’s total assets were $1.9
million and its accounts payable were $390,000. Sales, which in
2016 were $2.3 million, are expected to increase by 25% in 2017.
Total assets and accounts payable are proportional to sales, and
that relationship will be maintained. Wallace typically uses no
current liabilities other than accounts payable. Common stock
amounted to $380,000 in 2016, and retained earnings were $240,000.
Wallace has arranged to sell $100,000 of new common stock in 2017...
At year-end 2016, Wallace Landscaping’s total assets were $2.0 million, and its accounts payable were $345,000....
At year-end 2016, Wallace Landscaping’s total assets were $2.0
million, and its accounts payable were $345,000. Sales, which in
2016 were $2.2 million, are expected to increase by 20% in 2017.
Total assets and accounts payable are proportional to sales, and
that relationship will be maintained. Wallace typically uses no
current liabilities other than accounts payable. Common stock
amounted to $375,000 in 2016, and retained earnings were $240,000.
Wallace has arranged to sell $70,000 of new common stock in 2017...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- The Teamsters Union is attempting to organize the drivers at We Haul trucking company. Workers who...
- As we discuss race and racism here is a short "Statement on Race" put out by...
- Use the method of reduction of order to find a second independent solution of the given...
- (Annuity payments) Mr. Bills Preston, Esq., purchased a new house for $280,000. He paid $80,000 up...
- When are sellers from online auction sites required to pay income tax? Please provide and discuss...
- A pharmaceutical company has a new drug which relieves headaches. However, there is some indication that...
- Kaizen is a Japanese term for continuous improvement in all aspects of an entity’s performance, at...
ADVERTISEMENT