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Holcomb and Cromworthy are forecasting a 10% increase in sales next year. Assume the company is operating at 90% capacity. The company has 100,000 shares of common stock outstanding and dividends are $0.22 per share.

At 90% capacity, what level will sales have to reach for the discretionary items to become spontaneous that is move-in direct proportion to sales? Compute the new level of net income for the company Compute the company's additional retained earnings for the year Compute the new level of total assets required Calculate the new level of current liabilities Compute the company's new level of retained earnings on the balance sheet Calculate the level of Additional Funds Needed (AFN) to support the increase in sales.

CHAPTER 16 Balance Sheet, Income Statement for use with Chapters 16 Homework BALANCE SHEETS 2015 2014 ASSETS $ 52,000 402,000 836,000 $1,290,000 527,000 ( 166,200) $360,800 $1,650,800 $ 57,600 CASH ACCOUNTS RECEIVABLE 351,200 715,200 $1,124,000 491,000 INVENTORIES TOTAL CURRENT ASSETS GROSS FIXED ASSETS ( 146,200) $ 344,800 LESS: ACCUMULATED DEPRECIATION NET FIXED ASSETS TOTAL ASSETS $1,468,800 LIABILITIES AND EQUITY $ 175,200 225,000 $ 145,600 200,000 136,000 $ 481,600 ACCOUNTS PAYABLE NOTES PAYABLE ACCRUALS 140,000 $ 540,200 424,612 460,000 TOTAL CURRENT LIABILITIES LONG-TERM DEBT 323,432 460,000 COMMON STOCK RETAINED EARNINGS 225,988 $ 685,988 $1,650,800 203,768 $ 663,768 $1,468,800 TOTAL EQUITY TOTAL LIABILITIES AND EQUITY INCOME STATEMENTS 2015 2014 SALES $3,850,000 (3,250,000) 600,000 (430,300) ( 20,000) $ 149,700 (76,000) $ 73,700 ( 29,480) $ 44,220 $0.442 $3,432,000 ( 2,864,000) 568,000 (340,000) (18,900) $ 209,100 ( 62,500) $ 146,600 (58,640) $ 87,960 COST OF GOODS SOLD GROSS PROFIT OTHER EXPENSES DEPRECIATION EBIT INTEREST EXPENSE EBT TAXES (40%) NET INCOME $0.880 EPS CHAPTER 16 Balance Sheet, Income Statement for use with Chapters 16 Homework BALANCE SHEETS 2015 2014 ASSETS $ 52,000 402,000 836,000 $1,290,000 527,000 ( 166,200) $360,800 $1,650,800 $ 57,600 CASH ACCOUNTS RECEIVABLE 351,200 715,200 $1,124,000 491,000 INVENTORIES TOTAL CURRENT ASSETS GROSS FIXED ASSETS ( 146,200) $ 344,800 LESS: ACCUMULATED DEPRECIATION NET FIXED ASSETS TOTAL ASSETS $1,468,800 LIABILITIES AND EQUITY $ 175,200 225,000 $ 145,600 200,000 136,000 $ 481,600 ACCOUNTS PAYABLE NOTES PAYABLE ACCRUALS 140,000 $ 540,200 424,612 460,000 TOTAL CURRENT LIABILITIES LONG-TERM DEBT 323,432 460,000 COMMON STOCK RETAINED EARNINGS 225,988 $ 685,988 $1,650,800 203,768 $ 663,768 $1,468,800 TOTAL EQUITY TOTAL LIABILITIES AND EQUITY INCOME STATEMENTS 2015 2014 SALES $3,850,000 (3,250,000) 600,000 (430,300) ( 20,000) $ 149,700 (76,000) $ 73,700 ( 29,480) $ 44,220 $0.442 $3,432,000 ( 2,864,000) 568,000 (340,000) (18,900) $ 209,100 ( 62,500) $ 146,600 (58,640) $ 87,960 COST OF GOODS SOLD GROSS PROFIT OTHER EXPENSES DEPRECIATION EBIT INTEREST EXPENSE EBT TAXES (40%) NET INCOME $0.880 EPS

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