Hughes Corporation, had the balance sheet shown in table 5F at the end of last y

Question

Hughes Corporation, had the balance sheet shown in table 5F at the end of last year (2012). The company had net income of $750,000 on sales of $10,000,000 and paid $250,000 in dividends last year. Hughes is at full capacity and considers all its assets spontaneous. Assume the net profit margin and dividend payout ratio remain the same this year, and that sales are projected to be $12,000,000 at the end of 2013.

QUESTONS:

Using the percentage-of-sales method, what is the forecasted end-of-this-year balance in

1.     The cash account?

2.     The accounts receivable account?

3.     The inventory account?

4.     Of fixed assets?

5.     The accounts payable account?

6.     The notes payable account?

7.     The accrued payables account?

8.     The long-term debt account?

9.     The common stock account?

10.  The retained earnings account?

11.  External financing need (EFN) or cash excess?

Hughes Corporation, had the balance sheet shown in table 5F at the end of last year (2012). The company had net income of $750,000 on sales of $10,000,000 and paid $250,000 in dividends last year. Hughes is at full capacity and considers all its assets spontaneous. Assume the net profit margin and dividend payout ratio remain the same this year, and that sales are projected to be $12,000,000 at the end of 2013. Using the percentage-of-sales method, what is the forecasted end-of-this-year balance in The cash account? The accounts receivable account? The inventory account? Of fixed assets? The accounts payable account? The notes payable account? The accrued payables account? The long-term debt account? The common stock account? The retained earnings account? External financing need (EFN) or cash excess?

Explanation / Answer

Cash account balance shall be=Last year cash balance/last year sales*current year sales

=200000/10000000*12000000

=$240000

The accounts receivable account=700000/10000000*12000000

=$840000

.

The inventory account=800000/10000000*12000000

=$960000

fixed assets=2300000/10000000*12000000

=2760000

accounts payable account=600000/10000000*12000000

=720000

notes payable account=250000/10000000*12000000

=$300000

accrued payables account=550000/10000000*12000000

=$660000

long-term debt account=1000000/10000000*12000000

=$1200000

common stock account will remain same as it does not depend directly on the sales.If however the sales effect the common stock then the common stock shall be

=900000/10000000*12000000

=$1080000

retained earnings account=700000/1000000*12000000

=$840000

AFN = Projected increase in assets

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