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Smiley Corporation's current sales and partial balance sheet areshown below. This year Sales $ 10,000...

Smiley Corporation's current sales and partial balance sheet are shown below. This year Sales $ 10,000 Balance Sheet: Liabilities Accounts payable $ 1,500 Notes payable $ 3,000 Accruals $ 2,000 Total current liabilities $ 6,500 Long-term bonds $ 2,000 Total liabilities $ 8,500 Common stock $ 1,000 Retained earnings $ 2,500 Total common equity $ 3,500 Total liabilities & equity $ 12,000 Sales are expected to grow by 12% next year. Assuming no change in operations from this year to next year, what are the projected spontaneous liabilities? Do not round intermediate calculations. Round your answer to the nearest dollar.

Solutions

Expert Solution

- Current Spontaneous sales = Accounts Payable + Accruals = $1500 + $2000

= $3500

Expected Sales Growth rate next year = 12%

Projected spontaneous liabilities = Current Spontaneous sales*(1+Expected Sales Growth rate)

= $3500*(1+0.12)

Projected spontaneous liabilities = $3,920

jeff jeffy answered 2 years ago
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