The AHAI Company's balance sheet of December 31, 2018 is given below:Accounts payableNotes payableAccrued wages and taxesLong-term debtCommon equityTotal liabilities & equityCashAccounts receivableInventoryNet fixed assetsTotal assetsO a. $6O b. $7O c. $8O d. $40O e. $5$10254095$170$2025153080$170Sales during the past year were $1,000, and they are expected to increase to $2,000 during 2019.AHAI's fixed assets were used to 60% of capacity during 2018, but its current assets were at theirproper levels. All assets except fixed assets increase at the same rate as sales, and fixed assets wouldalso increase at the same rate if the current excess capacity did not exist. Assume that AHAI's profitmargin will remain constant at 4.25 percent and that the company will continue to pay out 40 percentof its earnings as dividends. What amount of additional funds (AFN) will be needed during the nextyear assuming the company would use up the excess capacity before adding fixed assets?

First we need to determine the change in sales using the formula below: Change in sales = Expected…

also increase at the same rate if the current excess capacity did not exist. Assume that AHAI's profit margin will remain constant at 4.25 percent and that the company will continue to pay out 40 percent of its earnings as dividends. What amount of additional funds (AFN) will be needed during the next year assuming the company would use up the excess capacity before adding fixed assets? O a. $6 O b. $7 O c. $8 O d. $40 e. $5

also increase at the same rate if the current excess capacity did not exist. Assume that AHAI's profit margin will remain constant at 4.25 percent and that the company will continue to pay out 40 percent of its earnings as dividends. What amount of additional funds (AFN) will be needed during the next year assuming the company would use up the excess capacity before adding fixed assets? O a. $6 O b. $7 O c. $8 O d. $40 e. $5

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter4: The Balance Sheet And The Statement Of Shareholders' Equity

Section: Chapter Questions

Problem 6E: Balance Sheet Baggett Companys balance sheet accounts and amounts as of December 31, 2019, are shown...

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