1.

Income Statement

Current year

Sales

10,500

Cost of goods sold

2000

Salary expenses

3000

EBIT

5500

Interest

500

Taxable income

5000

Tax (20% rate)

1000

Net income

4000

Balance Sheet (Current Year)

Assets

Lib & OE

Inventory

20000

Salary payable

80000

land

180000

Long term Bond

70000

Common stock

50000

Total

2,00,000

Total

2,00,000

Sales for the upcoming year expected to be $16,500. Costs of goods sold, salary exp, current assets, fixed assets, and Salary payable will increase proportionately with sales. The tax rate and the dividend payout rate will also remain constant. Cash dividend paid $15,000 and will maintain a constant payout ratio. However, $10,000 new bond will be issued in the upcoming year and $2,500 interest will have been charged for that.

A)Calculate complete pro forma Income Statement

B)Calculate complete pro forma Income Statement

C)Calculate the amount of external finance needed