At year-end 2021, Wallace Landscaping's total assets, all of which are used in operations, were $1.97 million, and its accounts payable were $435,000. Sall which in 2021 were $3.4 million, are expected to increase by 30% in 2022. Total assets and accounts payable are proportional to sales, and that relationsh be maintained. Wallace typically uses no current liabilities other than accounts payable. Common stock amounted to $465,000 in 2021, and retained earnin were $270,000. Wallace has arranged to sell $190,000 of new common stock in 2022 to meet some of its financing needs. The remainder of its financing n will be met by issuing new long-term debt at the end of 2022. (Because the debt is added at the end of the year, there will be no additional interest expens due to the new debt.) Its net profit margin on sales is 3%, and 45% of earnings will be paid out as dividends. a. What was Wallace's total long-term debt in 2021? Do not round intermediate calculations. Enter your answer in dollars. For example, an answer of $2 m should be entered as 2,000,000. Round your answer to the nearest dollar. $ What were Wallace's total liabilities in 2021? Do not round intermediate calculations. Enter your answer in dollars. For example, an answer of $2 million should be entered as 2,000,000. Round your answer to the nearest dollar. $ b. How much new long-term debt financing will be needed in 2022? (Hint: AFN- New stock = New long-term debt.) Do not round intermediate calculations Enter your answer in dollars. For example, an answer of $2 million should be entered as 2,000,000. Round your answer to the nearest dollar.
At year-end 2021, Wallace Landscaping's total assets, all of which are used in operations, were $1.97 million, and its accounts payable were $435,000. Sall which in 2021 were $3.4 million, are expected to increase by 30% in 2022. Total assets and accounts payable are proportional to sales, and that relationsh be maintained. Wallace typically uses no current liabilities other than accounts payable. Common stock amounted to $465,000 in 2021, and retained earnin were $270,000. Wallace has arranged to sell $190,000 of new common stock in 2022 to meet some of its financing needs. The remainder of its financing n will be met by issuing new long-term debt at the end of 2022. (Because the debt is added at the end of the year, there will be no additional interest expens due to the new debt.) Its net profit margin on sales is 3%, and 45% of earnings will be paid out as dividends. a. What was Wallace's total long-term debt in 2021? Do not round intermediate calculations. Enter your answer in dollars. For example, an answer of $2 m should be entered as 2,000,000. Round your answer to the nearest dollar. $ What were Wallace's total liabilities in 2021? Do not round intermediate calculations. Enter your answer in dollars. For example, an answer of $2 million should be entered as 2,000,000. Round your answer to the nearest dollar. $ b. How much new long-term debt financing will be needed in 2022? (Hint: AFN- New stock = New long-term debt.) Do not round intermediate calculations Enter your answer in dollars. For example, an answer of $2 million should be entered as 2,000,000. Round your answer to the nearest dollar.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Long-Term Financing Needed
At year-end 2021, Wallace Landscaping's total assets, all of which are used in operations, were $1.97 million, and its accounts payable were $435,000. Sales,
which in 2021 were $3.4 million, are expected to increase by 30% in 2022. Total assets and accounts payable are proportional to sales, and that relationship will
be maintained. Wallace typically uses no current liabilities other than accounts payable. Common stock amounted to $465,000 in 2021, and retained earnings
were $270,000. Wallace has arranged to sell $190,000 of new common stock in 2022 to meet some of its financing needs. The remainder of its financing needs
will be met by issuing new long-term debt at the end of 2022. (Because the debt is added at the end of the year, there will be no additional interest expense
due to the new debt.) Its net profit margin on sales is 3%, and 45% of earnings will be paid out as dividends.
a. What was Wallace's total long-term debt in 2021? Do not round intermediate calculations. Enter your answer in dollars. For example, an answer of $2 million
should be entered as 2,000,000. Round your answer to the nearest dollar.
$
What were Wallace's total liabilities in 2021? Do not round intermediate calculations. Enter your answer in dollars. For example, an answer of $2 million
should be entered as 2,000,000. Round your answer to the nearest dollar.
$
b. How much new long-term debt financing will be needed in 2022? (Hint: AFN - New stock = New long-term debt.) Do not round intermediate calculations..
Enter your answer in dollars. For example, an answer of $2 million should be entered as 2,000,000. Round your answer to the nearest dollar.
$
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