Use the following information and the percent-of-sales method to answer the following questions(s).
Below is the 2014 year-end balance sheet for Banner, Inc. Sales for 2014 were $1,600,000 and are expected to be $2,000,000 during 2015. In addition, we know that Banner plans to pay $90,000 in 2015 dividends and expects projected net income of 4% of sales. (For consistency with the Answer selections provided, round your forecast percentages to two decimals).
Banner, Inc. Balance Sheet
December 31, 2014
Assets
Current assets $890,000
Net fixed assets 1,000,000
Total $1,890,000
Liabilities and Owners’ Equity
Accounts Payable $160,000
Accounts Expense $100,000
Notes payable $700,000
Long-term debt $300,000
Total liabilities $1,260,000
Common Stock (plus paid-in capital) $360,000
Retained earnings $270,000
Common equity $630,000
Total $1,890,000
Banner’s project retained earnings for 2015 are:
$340,000
$260,000
$280,000
$350,000
