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# fm14 4 - being needed 14-5 a earnings Retained stock Common...

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Answers and Solutions: 14 - 4 14-4 S 2007 = \$2,000,000; A 2007 = \$1,500,000; CL 2007 = \$500,000; NP 2007 = \$200,000; A/P 2007 = \$200,000; Accruals 2007 = \$100,000; PM = 5%; d = 60%; A * /S 0 = 0.75. AFN = (A * /S 0 ) S - (L * /S 0 ) S - MS 1 (1 - d) = (0.75) S - 000 , 000 , 2 \$ 000 , 300 \$ S -(0.05)(S 1 )(1 - 0.6) = (0.75) S - (0.15) S - (0.02)S 1 = (0.6) S - (0.02)S 1 = 0.6(S 1 - S 0 ) - (0.02)S 1 = 0.6(S 1 - \$2,000,000) - (0.02)S 1 = 0.6S 1 - \$1,200,000 - 0.02S 1 \$1,200,000 = 0.58S 1 \$2,068,965.52 = S 1 . Sales can increase by \$2,068,965.52 - \$2,000,000 = \$68,965.52 without additional funds
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Unformatted text preview: being needed. 14-5 a. . earnings Retained stock Common debt term-Long Payable Accounts equity and s liabilitie Total + + + = \$1,200,000 = \$375,000 + Long-term debt + \$425,000 + \$295,000 Long-term debt = \$105,000. Total debt = Accounts payable + Long-term debt = \$375,000 + \$105,000 = \$480,000. Alternatively, Total debt = equity and s liabilitie Total- Common stock - Retained earnings = \$1,200,000 - \$425,000 - \$295,000 = \$480,000....
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