Question

The accounts related to the Balance Sheet as well as Income Statement for a company are given below as of Dec 31st 2017. Company Y does not distribute any dividends and had no depreciation in 2017. Accounts in $ Sales Common Stock Cost of Goods Sold Accumulated Retained Earnings Interest Long Term Debt Taxes Notes Payable Net Fixed Assets Accounts Payable Inventory Accounts Receivable Cash 2017 2,000 1,776 1,400 224 320 3,200 56 200 3,600 600 1,200 880 320 Anticipating the economic recovery and increased demand, company would like to grow 10% per year in the following two years In 2017, company was operating 10 % below capacity, that is, in 2018, sales can be increased without having to increase assets. Here is what the company is planning for 2018 and 2019: 2018: No dividends will be distributed, no stock sale or purchase will take place All assets stay as before, accounts payable increases by 10%. COGS increases at the same rate as sales, interest, tax rate, and NWC stay the same 2019:

Answer 1

	2018	2019
Sales	2200	2420
Cogs	-1540	-1694
Interest	-320	-352
Profit before taxes	340	374
Taxes	-68	-74.8
Profits	272	299.2
Tax rate = 56/280*100
Tax rate = 20%
Liabilities	2018	2019	Assets		2018	2019
Common stock	1776	1776	Net fixed assets		3600	3960
Accumulated retained earnings	496	795.2	Inventory		1200	1320
Long term debt	3200	3200	Accounts recievable		880	968
Notes payable	140	282	Cash		320	352
Accounts payable	660	726
Total	6272	6779.2		6000	6000	6600
The mismatch in balance sheet in assets and liabilities is due to requirement of question t make assets same as previous year but in liabilities effect of profit is shown in retained earnings