Assignment

BBP, Inc., with sales of $500,000, has the following balance sheet:

BBP, Incorporated Balance Sheet as of 12/31/X0

Assets Liabilities

Cash $ 25,000 Accounts Payable $ 15,000

Accounts Receivable $ 50,000 Accruals $ 20,000

Inventory $ 75,000 Notes Payable $ 0

Current Assets $150,000 Current Liabilities $ 85,000

Fixed Assets $200,000 Common Stock $100,000

Retained Earnings $165,000

Total Assets $350,000 Total Liabilities/Equity $350,000

The firm earns 15% on sales and distributes 25% of its earnings. Using the percent of sales method, forecast the new balance sheet for sales of $600,000 assuming that cash changes with sales and that the firm is not operating at capacity. Will the firm need external; funds? Would your answer be different if the firm distributed all of its earnings?