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Percentage of Sales Method

Abbreviated financial statements for Archimedes Levers are shown in Table 19.12 . If sales increase by 10% in 2011 and all other items, including debt, increase correspondingly, what must be the balancing item? What will be its value?

Income Statement

Sales $4000
Costs, including interest 3500
Net income $500

Balance Sheet, Year-End 2010

2010 2009 2010 2009

Assets $3,200 $2,700 Debt $1,200 $1,033
Equity 2000 1667
Total 3200 2700 Total 3200 2700

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Solution Summary

The solution finds out balancing item and its value by using percentage of sales method with the give financial statement data

$2.19