Question
In: Accounting
Philip Morris expects the sales for his clothing company to be $540,000 next year. Philip notes...
Philip Morris expects the sales for his clothing company to be
$540,000 next year. Philip notes that net assets (Assets −
Liabilities) will remain unchanged. His clothing firm will enjoy a
11 percent return on total sales. He will start the year with
$140,000 in the bank.
What will Philip's ending cash balance be?
Solutions
Expert Solution
Answer
Expected Sales = 540000 $
Return on total sales = 11 %
Profit = 540000 * 11 %
= 59400 $
Net Assets remain unchanged that means there is no addition to these element.
Calculation of Closing Cash balance -
Opening Cash balance 140000 $
(+) Profit 59400 $
(-) Addition to asset (0) $
____________
Closing Cash balance 209400 $
ekkarill92 answered 1 year agoRelated Solutions
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CHAPTER 6
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Amortization of goodwill....................................
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