Answered: Daryyu Inc.’s Balance Sheet as of…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 103.4C

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Question

Daryyu Inc.’s Balance Sheet as of December 31, 2022 is as follows:

Current Assets	P	800,000.00	Accounts Payable	P	200,000.00
			Notes Payable		200,000.00
			Long-term Liabilities		350,000.00
Fixed Assets		300,000.00	Equity		350,000.00
		1,100,000.00			1,100,000.00

In 2022, the company reported sales of 3,000,000, Net Income of 60,000, and dividends of 10,000. Sales are projected to increase by 10% next year. Both Profit Margin and the Dividend Pay-Out Ratio will remain the same. Operations are at full capacity. Assume external fund will be raised through issuances of Long-Term Obligations or Bonds.

A. How much Long-term Debt will the company have to issue next year?

B. If the operations are not in full capacity, what will be your answer?

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