Finns€™ Fridges is a company created by twin brothers David and Douglas Finn, who rented small refrigerators to other students in their college dormitory. Use the following statements to answer the questions about Finns€™ Fridges.

a. Suppose the Finns believe they can increase revenues to $2,600 in year 3. Use this figure and the percentage of sales balance sheet (Practice Problem 26) to forecast the company€™s balance sheet at the end of year 3. Remember that the €œfinancing€ components (long-term debt and total owners€™ equity) should be left unchanged from the year 2 figures.
b. The forecast balance sheet does not balance! Determine the amount of external financing required by Finns€™ Fridges based on the initialforecast.

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Balance Sheet for Finns' Fridges (End of the year indicated) Year 1 ($) Year 2 (S) Assets Cash Property and equipment (net) Total assets Liabilities and Owners' Equity Interest payable Tax payable Dividends payable Long-term debt Total liabilities Common shares Retained earnings Total owners' equity Total liabilities and owners' equity 1,150 3,840 4,990 493 3,888 4,381 160 182 210 2,400 2,952 1,000 429 1,429 4,381 200 200 3,200 3,777 1,000 213 1,213 4,990 Income Statement for Finns' Fridges (For the full year indicated) Year 1 (S) Year 2 ($) 2,200 220 Revenues (net of bad debts) Selling and administrative expenses Loss (stolen equipment) EBITDA Amortization expense EBIT Interest expense Earnings before tax Tax (30%) Net income Earnings per share (100 shares) Dividends per share 1,950 0 160 1,790 1,000 790 200 590 0 1,980 1,212 768 160 608 182 426 4.26 2.10 413 4.13 2.00