Rework Problem 8 assuming that Genatron Manufacturing expects its sales to increase by 20 percent in 2021.  What is the amount of external financing needed?

Data from Problem 8

Genatron Manufacturing expects its sales to increase by 10 percent in 2021. Estimate the firm’s external financing needs by using the percent-of-sales method for the 2020 data.  Assume that no excess capacity exists and that one-half of the 2021 net income will be retained in the business.

Financial statement of Genatron Manufacturing.

Balance sheet ASSETS	2020	2019
Cash	$40,000	$50,000
Accts. receivable	260,000	200,000
Inventory	500,000	450,000
Total current assets	800,000	700,000
Fixed assets, net	400,000	300,000
Total assets LIABILITIES AND EQUITY	$1,200,000	$1,000,000
Accts. payable	$170,000	$130,000
Bank loan	90,000	90,000
Accruals	70,000	50,000
Total current liabilities	330,000	270,000
Long-term debt, 12%	400,000	300,000
Common stock, $10 par	300,000	300,000
Capital surplus	50,000	50,000
Retained Earnings	120,000	80,000
Income statement	2020	2019
Net sales	$1,500,000	$1,300,000
Cost of goods sold	900,000	780,000
Gross profit	600,000	520,000
Expenses: general and administrative	150,000	150,000
Marketing	150,000	130,000
Depreciation	53,000	40,000
Interest	57,000	45,000
Earnings before taxes	190,000	155,000
Income taxes	76,000	62,000
Net income	$114,000	$93,000