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

INCOME STATEMENT, 2019Sales..............................$2,000Cost..................................1,500Net income......................$ 500

a. If sales increase by 20% in 2020 and the company uses a strict percentage of sales planning model (meaning that all items on the income and balance sheet also increase by 20%), what must be the balancing item?

b. What will be the value of this balancing item?

Transcribed Image Text:

BALANCE SHEET, YEAR-END 2019 2018 2018 2019 $ 833 $2,500 $3,000 $1,000 Assets Debt 1,667 Equity Total 2,000 $3,000 Total $2,500 $3,000 $2,500