Krogh Lumber's 2008 financial statements are shown here.

a. Assume that the company was operating at full capacity in 2008 with regard to all items except fixed assets; fixed assets in 2008 were being utilized to only 75% of capacity. By what percentage could 2009 sales increase over 2008 sales without the need for an increase in fixed assets?b. Now suppose 2009 sales increase by 25% over 2008 sales. Assume that Krogh cannot sell any fixed assets. All assets other than fixed assets will grow at the same rate as sales; however, after reviewing industry averages, the firm would like to reduce its Operating costs/Sales ratio to 82% and increase its debt ratio to 42%. The firm will maintain its 60% dividend payout ratio, and it currently has 1 million shares outstanding. The firm plans to raise 35% of its 2009 total debt as notes payable, and it will issue bonds for the remainder. Its before-tax cost of debt is 11%. Any stock issuances or repurchases will be made at the firm's current stock price of $40. Develop the projected financial statements as shown in Table 16-2. What are the balances of notes payable, bonds, common stock, and retainedearnings?

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Krogh Lumber: Balance Sheet as of December 31, 2008 (Thousands of Dollars) $ 1,800 $ 7,200 Cash Accounts payable Receivables 10,800 Notes payable 3,472 2,520 Inventories 12,600 Accrued liabilities Total current assets $25,200 Total current liabilities $13,192 Mortgage bonds 5,000 Net fixed assets 2,000 21,600 Common stock Retained earnings Total liabilities and equity 26,608 Total assets $46,800 $46,800 Krogh Lumber: Income Statement for December 31, 2008 (Thousands of Dollars) $36,000 Sales 30,783 Operating costs including depreciation $ 5,217 Earnings before interest and taxes Interest 1,017 $ 4,200 Earnings before taxes Taxes (40%) 1,680 $ 2,520 Net income $ 1,512 $ 1,008 Dividends (60%) Addition to retained earnings