# Accounting for corporations : percentage of sales method

Document Sample

```					              Sub: Accounts                                               Topic: Accounting for Corporations

Question:
Calculation of additional finance needed using percentage of sales method.

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BPC anticipates reaching a sales level of \$6 million in one year. The company expects a net
income during the next year to equal \$400,000. Over the past several years, the company has
been paying 50k in dividends to its stockholders. The company expects to continue this policy
for at least the next year. The actual balance sheet and income statement for BPC are as
follows:

BPC
Balance sheet as of December 31, 2005
Cash           200,000         Accounts Payable             600,000
Accounts receivable 400,000                 Notes Payable               500,000
Inventories             1,200,000
Current liabilities         1,100,000
Current assets               1,800,000         Long-term debt             200,000
Net fixed assets             500,000         Stockholder’s equity             1,000,000
Total assets             2,300,000           Total Liabilities and equity 2,300,000
Using the percentage of sales method, calculate the additional financing needed over the next
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Description: Calculation of additional finance needed using percentage of sales method. : Using the percentage of sales method, calculate the additional financing needed over the next year at the \$6 million sales level.
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