Question

Smiley Corporation's current sales and partial balance sheet are shown below.
This year
Sales $ 10,000
Balance Sheet: Liabilities
Accounts payable $ 1,500
Notes payable $ 3,000
Accruals $ 1,400
Total current liabilities $ 5,900
Long-term bonds $ 2,000
Total liabilities $ 7,900
Common stock $ 1,500
Retained earnings $ 2,000
Total common equity $ 3,500
Total liabilities & equity $ 11,400
Sales are expected to grow by 14% next year. Assuming no change in operations from this year to next year, what are the projected spontaneous liabilities? Do not round intermediate calculations. Round your answer to the nearest dollar.

Answer 1

Based on the balance sheet of Smiley Corporation, the projected spontaneous liabilities is $3,306.

What Smiley Corporation's projected spontaneous liabilities?

This can be found as:

= (1 + Growth in sales) x (Accounts payable + Accruals)

Solving gives:

= (1 + 14%) x (1,500 + 1,400)

= 1.14 x 2,900

= $3,306

Find out more on forecasted balances at https://brainly.com/question/17087820.

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