Total long-term debt and total liabilities

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At year-end 2013, Wallace Landscaping's total assets were $2.17M and its accounts payable were $560k. Sales, which in 2013 were $3.5M, are expected to increase by 35% in 2014.

Total assets and accounts payable and propertional to sales, and that relationship will be maintained. Wallace typically uses to current liabilities other than accounts payable.

Common stock amount to $625K in 2013, and retained earnings were $395K. Wallace has arrange to sell $195K of new common stock in $2014 to meet some of the financial goals.

The remainder of its financial needs will be met by issuing new long-term debt at the end of 2014. (Because the debt is added as the end of the year, there will be no interest expense to the new debt?. Its net profit margin on sales is 5% and 45% earnings will be paid out as dividends.

a. What were Wallace's total long-term debt and total liabilities in 2013?

b. How much new long-term debt financing will be needed in 2014? (Hint: AFN - New stock = New long-term debt)

Reference no: EM131044467

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