5. Downeast Nautical Company expects sales of $2.4 million next year and expects sales of the same amount the following year. Sales are spread evenly throughout the year. On the basis of the following information, prepare a pro formabalance sheet and income statement for year end:

Cash = minimum of 4 percent of annual sales Accounts receivable = 60-day average collection period based on annual sales Inventories = turnover of 8 times a year Net tixed assets = $500,000 now; capital expenditures are equal to depreciation Accounts payable = 1 month's purchases Accruals = 3 percent of sales Bank borrowings = $50,000 now; can borrow up to $250,000 Long-term debt = $300,000 now; $75,000 payable at year end Common stock = $100,000; no additions planned Retained earnings = $500,000 now Net profit margin = 8 percent of sales Dividends - none Cost of goods sold = 60 percent of sales Purchases = 50 percent of cost of goods sold Income taxes = 50 percent of before-tax profits