James Pet Supplies Incorporated Balance Sheets Years ended 2014 and 2015 Assets Liab. Equity 2014 2015...

   

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James Pet Supplies Incorporated Balance Sheets Years ended 2014 and 2015 Assets Liab. Equity 2014 2015 2014 2015 Cash $1,500 $2,300 Accounts Pay $3,000 $4,000 Accounts Rec. 1,600 2,800 Inventory 1,900 2,900 Total Curr Liab 3,000 4,000 Total Curr 5,000 8,000 Long-Term Debt 4,000 5,500 Assets Fixed Assets 6,000 7,000 Common Stock 3,500 4,000 Ret. Earnings 500 1,500 Total Assets $11,000 $15,000 Total L. and Eq $11,000 $15,000 James Pet Supplies Incorporated 2015 1 James Pet Supplies Incorporated 2015 Income Statement Net Sales $100,000 Less: Cost of Goods Sold 71,000 Less: General and Administrative Expenses 25,000 Less: Depreciation 1,000 Earnings Before Interest and Taxes 3,000 Less: Interest Paid 1,000 Earnings Before Taxes 2,000 Less: Taxes (30%) Net Income 600 1,400 16. Suppose James Pet Supplies is projecting a 20% increase in sales for the coming year, and that cost of goods sold and general and administrative expenses remain a constant percentage of sales. In addition, the firm is projecting that current assets, fixed assets and current liabilities will increase with sales. The firm believes that depreciation and interest paid will not change next year. In addition, the firm believes that long-term debt and common stock will not change. Finally, the firm believes its tax rate and dividend payout ratio will remain unchanged. What is the projected Retained Earnings in 2016? James Pet Supplies Incorporated Balance Sheets Years ended 2014 and 2015 Assets Liab. Equity 2014 2015 2014 2015 Cash $1,500 $2,300 Accounts Pay $3,000 $4,000 Accounts Rec. 1,600 2,800 Inventory 1,900 2,900 Total Curr Liab 3,000 4,000 Total Curr 5,000 8,000 Long-Term Debt 4,000 5,500 Assets Fixed Assets 6,000 7,000 Common Stock 3,500 4,000 Ret. Earnings 500 1,500 Total Assets $11,000 $15,000 Total L. and Eq $11,000 $15,000 James Pet Supplies Incorporated 2015 1 James Pet Supplies Incorporated 2015 Income Statement Net Sales $100,000 Less: Cost of Goods Sold 71,000 Less: General and Administrative Expenses 25,000 Less: Depreciation 1,000 Earnings Before Interest and Taxes 3,000 Less: Interest Paid 1,000 Earnings Before Taxes 2,000 Less: Taxes (30%) Net Income 600 1,400 16. Suppose James Pet Supplies is projecting a 20% increase in sales for the coming year, and that cost of goods sold and general and administrative expenses remain a constant percentage of sales. In addition, the firm is projecting that current assets, fixed assets and current liabilities will increase with sales. The firm believes that depreciation and interest paid will not change next year. In addition, the firm believes that long-term debt and common stock will not change. Finally, the firm believes its tax rate and dividend payout ratio will remain unchanged. What is the projected Retained Earnings in 2016?

Answer rating: 100% (QA)

To calculate the projected Retained Earnings for James Pet Supplies Incorporated in 2016 we need to consider the given information and assumptions Giv... View the full answer