Jolly Joe's Novelties, Inc. had the financial data shown below last year. Jolly Joe's has just invented a new toy which they expect will cause sales to double from $100,000 to $200,000, increasing net income to $16,000. The company feels they can handle the increase without adding any fixed assets. a. Will Jolly Joe's need any new outside funding if they pay no dividends? b. If so, how much?
ASSETS Current Year
Current Assets:
Cash $8,000
Accounts Recievable $4,500
Inventory $9,500
Total Current Assets $22,000
Fixed Assets $340,000
TOTAL ASSETS $362,000
LIABILITIES AND EQUITY
Current Liabilities:
Accounts Payable $3,500
Accrued Expenses $1,500
Notes Payable $20,000
Total Current Liabilities $25,000
Mortgage $265,000
Total Liabilities $290,000
Common Stock $32,000
Retained Earnings $40,000
Total Equity $72,000
TOTAL LIABILITIES AND EQUITY $362,000