Assume that net working capital and all of the costs of Fake Stone, Inc. increase directly with sales. Also assume that the tax rate and the dividend payout ratio are constant. The firm is currently operating at full capacity. What is the external financing need if sales increase by 4 percent?

What is work specialization? Discuss its advantages and drawbacks

What will be an ideal response?

Assume that Healthy Lawn Maintenance estimates that it will not collect 2% of total credit sales in a given month. At the end of each month, it makes an adjusting entry. The aggregate effect of these entries during 2013 is as follows:

a. Bad Debt Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000 Accounts Receivable, net. . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . 40,000 b. Allowance for Uncollectibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000 Bad Debt Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000 c. Bad Debt Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000 Allowance for Uncollectibles . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . 40,000 d. Bad Debt Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000 Accounts Receivable, gross . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . 40,000 e. Accounts Receivable, gross . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000 Bad Debt Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000