$(2)$ The firm expects to pay $$35,800$ in cash dividends.

$(3)$ The firm wishes to maintain a minimum cash balance of $$32,000.$

$(4)$ Accounts receivable represent approximately $24\%$ of annual sales.

$(5)$ The firm's ending inventory will change directly with changes in sales.

$(6)$ Red Queen will purchase new machine costing $$42,400$ and have total depreciation of $$15,300.$

$(7)$ Accounts payable will change directly in response to changes in sales.

$(8)$ Taxes payable will equal one$-$fourth of the tax liability on the pro forma income statement.

$(9)$ Marketable securities$,$ other current liabilities, long$-$term debt, and common stock will remain unchanged.

a$.$ Prepare a pro forma income statement for next year, using the percent$-$of$-$sales method.

b$.$ Prepare a pro forma balance sheet for next year, using the judgmental approach.

c$.$ Analyze these statements, and discuss the resulting external financing required.

a$.$ Prepare a pro forma income statement for next year, using the percent$-$of$-$sales method.

Complete the pro forma income statement for next year below: $($Round to the nearest dollar. Round the percentage of sales to four decimal places.$)$

Pro Forma Income Statement

Red Queen Restaurants