Wilson Corporation projects net income next year to be $595,000. Accounts receivable and Inventory will have to be increased by $295,000 to accommodate this sales level. Wilson will pay dividends of $398,000. How much external financing will Wilson Corp. need assuming no further generated increase in liabilities?
A)$118,000
B)$209,000
C)$98,000
D)$78,000
Answer:
C)$98,000
Working notes for the above answer is as under
We have been provided with the information
net income next year to be $595,000.
Accounts receivable and Inventory will have to be increased by $295,000
Wilson will pay dividends of $398,000.
Here .
| Increase in AR and inventory | 295000 |
| Wilson will pay dividends | 398000 |
| Total | 693000 |
| Less: | |
| Net income | 595000 |
| external financing required | 98000 |
