3. Do you agree with Mr. Butlers estimate that he will need up to $465,000 in 20x11. How much will he need to borrow to finance his expected expansion in sales in 20x11 (assume sales volume hits $3.6 million)? To answer these questions, construct pro forma income statements and balance sheets for 20x11 and make the following assumptions:

• Mr. Butler reduces the payables period to 10 days
• Discounts are recorded as a separate line item on income statements
• The tax rate is a flat 34%
• Interest expense in 20x11 is based on bank debt of $465,000
• Bank debt is also used to repay any trade notes payable