Boreal Bikes’ 2026 budget: revenue 5,400,000; cost of goods sold 2,970,000; depreciation 200,000; net income 488,400; dividends 150,000; capital spending 700,000; minimum cash 150,000. Opening balances at 31 December 2025: PP&E, net 2,100,000; retained earnings 1,200,000. Drivers: receivables at 45 days of sales, inventory at 60 days of cost of goods sold, payables at 40 days of cost of goods sold, 365-day year. Round each line to the dollar and project the 31 December 2026 balances.
Boreal Bikes’ 2026 budget: revenue 5,400,000; cost of goods sold 2,970,000; depreciation 200,000; net income 488,400; dividends 150,000; capital spending 700,000; minimum cash 150,000. Opening balances at 31 December 2025: PP&E, net 2,100,000; retained earnings 1,200,000. Drivers: receivables at 45 days of sales, inventory at 60 days of cost of goods sold, payables at 40 days of cost of goods sold, 365-day year. Round each line to the dollar and project the 31 December 2026 balances.
Answer
Accounts receivable → 665753 · Inventory → 488219 · PP&E, net → 2600000 · Total assets → 3903972 · Accounts payable → 325479 · Retained earnings → 1538400
Cells - Accounts receivable · ±1 - Inventory · ±1 - PP&E, net · ±1 - Total assets · ±1 - Accounts payable · ±1 - Retained earnings · ±1 Receivables 45 × 5,400,000 ÷ 365 = 665,753; inventory 60 × 2,970,000 ÷ 365 = 488,219; PP&E 2,100,000 + 700,000 − 200,000 = 2,600,000; total assets 150,000 + 665,753 + 488,219 + 2,600,000 = 3,903,972; payables 40 × 2,970,000 ÷ 365 = 325,479; retained earnings 1,200,000 + 488,400 − 150,000 = 1,538,400. Excel for a days-driven line: =ROUND(45*B2/365,0).
Hermanson Vol 2 ch 23; Bigel ch 9, §6.5, §7.2–7.4; OpenStax Finance ch 18