ff1 Financing DeficitStevens Textile Corporation's 2019 financial statements are shown below:Balance Sheet as of December 31, 2019 (Thousands of Dollars)Cash$ 1,080 Accounts payable6,480Accruals9,000Line of credit$16,560Notes payable12,600Total current liabilitiesMortgage bondsCommon stockRetained earningsTotal assets$29,160Total liabilities and equityIncome Statement for December 31, 2019 (Thousands of Dollars)SalesOperating costsEarnings before interest and taxesInterestReceivablesInventoriesTotal current assetsNet fixed assetsPre-tax earnings$ 4,3202,8800$36,00034,000$ 2,000160$ 1,840460$1,380Dividends (40%)$ 552Addition to retained earnings$ 828Stevens grew rapidly in 2019 and financed the growth with notes payable and long-term bonds. Stevens expects sales to grow by 15% in the next year but will finance the growth with a line of credit, not notes payable or long-termbonds. Use the forecasted financial statement method to forecast a balance sheet and income statement for December 31, 2020. The interest rate on all debt is 10%, and cash earns no interest income. The line of credit is added at theend of the year, which means that you should base the forecasted interest expense on the balance of debt at the beginning of the year. Use the forecasted income statement to determine the addition to retained earnings. Assume thatthe company was operating at full capacity in 2019, that it cannot sell off any of its fixed assets, and that assets, spontaneous liabilities, and operating costs are expected to increase by the same percentage as sales. Determine therequired line of credit. Do not round intermediate calculations. Round your answers to the nearest dollar.Total assets: $LOC: $Taxes (25%)Net income2,100$9,3003,5003,50012,860$29,160

Total assets:Total assets refers to the total amount of assets possessed by a person or business.…

Stevens Textile Corporation's 2019 financial statements are shown below: Balance Sheet as of December 31, 2019 (Thousands of Dollars) Cash Receivables Inventories Total current assets Net fixed assets $1,080 6,480 9,000 $16,560 12,600 Accounts payable Accruals Line of credit Notes payable Total current liabilities Mortgage bonds Common stock Retained earnings Total assets $29,160 Total liabilities and equity Income Statement for December 31, 2019 (Thousands of Dollars) $ 4,320 2,880 0 2,100 $ 9,300 3,500 3,500 12,860 $29,160

Stevens Textile Corporation's 2019 financial statements are shown below: Balance Sheet as of December 31, 2019 (Thousands of Dollars) Cash Receivables Inventories Total current assets Net fixed assets $1,080 6,480 9,000 $16,560 12,600 Accounts payable Accruals Line of credit Notes payable Total current liabilities Mortgage bonds Common stock Retained earnings Total assets $29,160 Total liabilities and equity Income Statement for December 31, 2019 (Thousands of Dollars) $ 4,320 2,880 0 2,100 $ 9,300 3,500 3,500 12,860 $29,160

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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