1. Use the percentage of sales forecasting method to compute the additional financing needed by Lambrechts Specialty Shops, Inc. (LSS), if sales are expected to increase from a current level of $20 million to a new level of $25 million over the coming year. LSS expects earnings after taxes to equal $1 million over the next year. LSS intends to pay a $300,000 dividend next year. The current year balance sheet for LSS is as follows: Balance Sheet as of December 31, 20X3cash$1,000,000 Accounts payable$3,000,000Accounts receivable1,500,000 Notes payable3,000,000inventories6,000,000 Long-term debt2,000,000Net fixed assets3,000,000 Stockholders' equity3,500,00Total Assets$11,500,000 Total liabilities and equity$11,500,000All assets, except "cash", are expected to vary proportionately with sales. Of total liabilitiesand equity, only "accounts payable" is expected to vary proportionately with sales.

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Answered: Balance Sheet as of December 31, 20X3…

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter5: Accounting For Retail Businesses

Section: Chapter Questions

Problem 6PB: Single-step income Statement and balance sheet Selected accounts and related amounts for Kanpur Co....

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1. Use the percentage of sales forecasting method to compute the additional financing needed by Lambrechts Specialty Shops, Inc. (LSS), if sales are expected to increase from a current level of $20 million to a new level of $25 million over the coming year. LSS expects earnings after taxes to equal $1 million over the next year. LSS intends to pay a $300,000 dividend next year. The current year balance sheet for LSS is as follows:

Balance Sheet as of December 31, 20X3
cash
$1,000,000 Accounts payable
$3,000,000
Accounts receivable
1,500,000 Notes payable
3,000,000
inventories
6,000,000 Long-term debt
2,000,000
Net fixed assets
3,000,000 Stockholders' equity
3,500,00
Total Assets
$11,500,000 Total liabilities and equity
$11,500,000
All assets, except "cash", are expected to vary proportionately with sales. Of total liabilities
and equity, only "accounts payable" is expected to vary proportionately with sales.

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