You are preparing to discuss borrowing needs with your? bank'sloan officer who asks you to prepare? pro-forma financialstatements. Below are the financial statements for the year justended. Your sales department is projecting a 21?% increase insales. Days sales outstanding are expected to improve to 45 days.With respect to inventory and accounts? payable, assume thatpurchases will be ?$9 comma 450 comma 100 and cash payments will be?$8 comma 505 comma 090. The Company expects to invest ?$1 comma542 comma 000 ?(net of? depreciation) to expand its storagecapacity and achieve scale savings. ? Accordingly, gross profitmargins are expected to be 29?% in the future. Other expenses areexpected to remain the same percentage of sales. The retentionratio is 47?%. For ease of? calculation, assume interest expenseremains the same. Prepare? pro-forma financial statements anddetermine the amount of borrowing? needs, which will be reflectedin? long-term debt.? (round your answers to the nearest? integer,and fill in all amounts including? totals; print out the problem toaid working? it) Cash ?400,000 Sales ?10,000,000 AccountsReceivable ?1,400,000 Cost of Sales ?8,000,000 Inventory ?1,800,000??Gross Profit ?2,000,000 ??Total current Assets ?3,600,000Operating Expense ?900,000 Fixed Assets ?1,400,000 EBIT ?1,100,000Total Assets ?5,000,000 Interest Exp ?100,000 EBT ?1,000,000Accounts Payable ?1,200,000 Tax? (30%) ?300,000 ?Long-term Debt?1,000,000 Net Income ?700,000 ??Total Debt ?2,200,000 Common Stock?1,300,000 Retained earnings ?1,500,000 ??Total Debt and Equity?5,000,000
Cash???
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Sales???
Accounts Receivable???
Cost of Sales????
Inventory????
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Gross Profit????
??Total Current Assets????
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Operating Expenses???
Fixed Assets???
EBIT??
Total Assets????
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Interest Exp???
Accounts Payable???
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EBT??
?Long-term Debt????
Tax??
Common Stock????
Net Income???
Retained Earnings???
Total Debt and Equity
