At year-end 2018, total assets for Arrington Inc. were$1.8 million and accounts payable were $450,000. Sales, which

Question:

At year-end 2018, total assets for Arrington Inc. were$1.8 million and accounts payable were $450,000. Sales, which in 2018 were $3.0 million,are expected to increase by 25% in 2019. Total assets and accounts payable are proportional to sales, and that relationship will be maintained; that is, they will grow at the same rate as sales. Arrington typically uses no current liabilities other than accounts payable. Common stock amounted to $500,000 in 2018, and retained earnings were $475,000. Arrington plansto sell new common stock in the amount of $130,000. The firm’s profit margin on sales is 5%; 35% of earnings will be retained.

a. What were Arrington’s total liabilities in 2018?

b. How much new long-term debt financing will be needed in 2019? AFN 2 New stock 5 New long-term debt.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Accounts Payable
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive...

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