Use the following information and the percent-of-sales method to Answer questions 1 -4. - 1426

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Use the following information and the percent-of-sales method to Answer questions 1 -4.

Below is the 2004 year-end balance sheet for Banner, Inc. Sales for 2004 were $1,600,000 and are expected to be $2,000,000 during 2005. In addition, we know that Banner plans to pay $90,000 in 2005 dividends and expects projected net income of 4% of sales. (For consistency with the Answer selections provided, round your forecast percentages to two decimals.)

                 Banner, Inc. Balance Sheet

                       December 31, 2004

Assets

Current assets                                                                $890,000

Net fixed assets                                                            1,000,000

Total                                                                            $1,890,000

Liabilities and Owners’ Equity

Accounts payable                                                           $160,000

Accrued expenses                                                            100,000

Notes payable                                                                  700,000

Long-term debt                                                                300,000

Total liabilities                                                               1,260,000

Common stock (plus paid-in capital)                               360,000

Retained earnings                                                            270,000

Common equity                                                               630,000

Total                                                                            $1,890,000

 

 

 1 Banner’s projected current assets for 2005 are:

2.             Banner’s projected accounts payable balance for 2005 is:

3.             Banner’s projected fixed assets for 2005 are:

4    What is the present value of $1,000 to be received 10 years from today? Assume that the investment pays 8.5% and it is compounded monthly (round to the nearest $1).

Solution Description

Use the following information and the percent-of-sales method to Answer questions 10 -12.

Below is the 2004 year-end balance sheet for Banner, Inc. Sales for 2004 were $1,600,000 and are expected to be $2,000,000 during 2005. In addition, we know that Banner plans to pay $90,000 in 2005 dividends and expects projected net income of 4% of sales. (For consistency with the Answer selections provided, round your forecast percentages to two decimals.)

                 Banner, Inc. Balance Sheet

                       December 31, 2004

Assets

Current assets                                                                $890,000

Net fixed assets                                                            1,000,000

Total                                                                            $1,890,000

Liabilities and Owners’ Equity

Accounts payable                                               &nbs