Randy & Wiskers Enterprises reported sales of $15.5 million for the 2015 financial year. In order to identify the financial needs for the 2016 financial year, you were requested to compile a pro forma balance sheet. The balancesheet as of December 31, 2015 (shown on the next page) and other additional information are as follows. Additional information
(1) The balance sheet items vary directly with sales: Accounts receivable (15%), Inventory (15%), Accounts payable (10%), and net profit margin (2%).
(2) All other balance sheet items remain unchanged.

(3) Minimum cash balance of $520,000 is desired.
(4) New equipment costing $20,000 will be purchased during 2016, and the net fixed assets will increase to $5,815,000.
(5) Accruals will increase to $660,000.
(6) Long-term debt is not expected to be repaid in full, and no common stock will be repurchased.
(7) The dividend payout will remain unchanged at 50% of net profits.
(8) Sales are expected to decrease to $15,000,000.

Based on the information provided, answer the following:
a. Prepare a pro forma balance sheet as at December 31, 2016.
b. Identify and describe the needs as indicated by the pro forma balance sheet in part a.

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Randy & Wiskers Enterprises Balance Sheet December 31, 2015 ($000) Liabilities and stockholders' equity Accounts payable $1,870 600 150 Assets Cash Marketable securities Accounts receivable Inventories $ 500 350 1,500 2,300 Total current assets $4,650 5,800 $10,450 Net fixed assets Total assets Accruals Other current liabilities. Total current liabilities Long-term debt Total liabilities Common equity $2,620 2,000 4,620 5,830 Total liabilities and stockholders' equity $10,450