Here are the abbreviated financial statements for Planner’s Peanuts: INCOME STATEMENT, 2022 Sales $ 5,000 Cost 3,900 Net income $ 1,100 BALANCE SHEET, YEAR-END   2021 2022   2021 2022 Assets $ 7,500 $ 12,100 Debt $ 833 $ 1,000       Equity 6,667 11,100 Total $ 7,500 $ 12,100 Total $ 7,500 $ 12,100 If sales increase by 10% in 2023 and the company uses a strict percentage of sales planning model (meaning that all items on the income and balance sheet also increase by 10%), what must be the balancing item? What will be the value of this balancing item?

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
Question

Here are the abbreviated financial statements for Planner’s Peanuts:

INCOME STATEMENT, 2022
Sales $ 5,000
Cost 3,900
Net income $ 1,100
BALANCE SHEET, YEAR-END
  2021 2022   2021 2022
Assets $ 7,500 $ 12,100 Debt $ 833 $ 1,000
      Equity 6,667 11,100
Total $ 7,500 $ 12,100 Total $ 7,500 $ 12,100
  1. If sales increase by 10% in 2023 and the company uses a strict percentage of sales planning model (meaning that all items on the income and balance sheet also increase by 10%), what must be the balancing item?
  2. What will be the value of this balancing item?
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