Percentage of Sales Method
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19 -8
Abbreviated financial statements for Archimedes Levers are shown in Table 19.12. If sales increase by 10% in 2011 and all others items, including debt, increase correspondingly, what must be the balancing item? What will be its value?
Income Statement
Sales $ 4,000
Cost, including interest $ 3,500
Net Income $ 500
Balance Sheet, Year-End
2010 2009 2010 2009
Assets $ 3,200 $ 2,700 Debt $ 1,200 $ 1,033
Equity $ 2,000 $ 1,667
Total $ 3,200 $ 2,700 Total $ 3,200 $ 2,700
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Solution Summary
The solution computes balancing item and its value by applying % of sales method.
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