ACCT2060-Major Manuscripts, Inc. is currently operating at
Question # 00554137
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Updated on: 06/29/2017 05:12 AM Due on: 06/29/2017
Chapter 4 Exam
ACCT2060
Out of Canvas potion Name Cassi Stephenson
ACCT2060
Out of Canvas potion Name Cassi Stephenson
1. Major Manuscripts, Inc. is currently operating at maximum capacity. Cost
of goods sold, depreciation, interest, all assets, and current liabilities vary
directly with sales. The tax rate and the dividend payout ratio will remain
constant. How much additional debt is required if no new equity is raised
and sales are projected to increase by 6 percent?
Projected Total assets=20,640*1.06 = 21,878.40
Projected accounts payable=3,350*1.06 = 3,551
Current long term debt=2,780*1.06 = 2,946.80 Current common stock=10,000*1.06 = 10,600
Projected retained earnings= 4,510+[(2,600-950)*1.06] = 6,259
Additional debt required= 21,878.40-3,551-2,946.80-10,600-6259
Answer= -1,478.40
of goods sold, depreciation, interest, all assets, and current liabilities vary
directly with sales. The tax rate and the dividend payout ratio will remain
constant. How much additional debt is required if no new equity is raised
and sales are projected to increase by 6 percent?
Projected Total assets=20,640*1.06 = 21,878.40
Projected accounts payable=3,350*1.06 = 3,551
Current long term debt=2,780*1.06 = 2,946.80 Current common stock=10,000*1.06 = 10,600
Projected retained earnings= 4,510+[(2,600-950)*1.06] = 6,259
Additional debt required= 21,878.40-3,551-2,946.80-10,600-6259
Answer= -1,478.40
2. Assume the profit margin, tax rate, and the payout ratios of Major
Manuscripts, Inc. are constant. Also assume the cost of goods sold,
depreciation, interest, all assets and current liabilities vary with sales. If
sales increase by 9 percent, what is the pro forma retained earnings?
Manuscripts, Inc. are constant. Also assume the cost of goods sold,
depreciation, interest, all assets and current liabilities vary with sales. If
sales increase by 9 percent, what is the pro forma retained earnings?
3. Assume that Fake Stone, Inc. is operating at full capacity. Also assume
that all assets, cost of goods sold, depreciation, interest, and current
liabilities vary directly with sales. The dividend payout ratio and tax rate
are constant. What is the external financing need if sales increase by 12
percent?
that all assets, cost of goods sold, depreciation, interest, and current
liabilities vary directly with sales. The dividend payout ratio and tax rate
are constant. What is the external financing need if sales increase by 12
percent?
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Solution: ACCT2060-Major Manuscripts, Inc. is currently operating at