3-24 (Integrated-pro forma statements) Provincial Imports has assembled statements and information c to prepare financial plans for the coming year Income (profit and loss) statement Provincial Imports for the year ended 31 December 2011 Sales revenue Less Cost of goods sold Gross profits Less Operating expenses Operating profits Less Interest expense Net profits before taxes Less Taxes (rate 4036) Net profits after taxes Less Cash dividends To retained $5 000000 2 750 000 $2 250000 850 $1 400000 200000 $1 200000 480 $720000 earnings 432 000 Balance sheet Provincial Imports 31 December 2011 Assets Liabilities and equities Cash Marketable securities Accounts receivable Inventories Total current assets Net non-current assets Total assets $200000 275 000 625 000 500 000 $1 600 000 $1 400 000 Accounts payable Taxes payable Notes payable Other current liabilities Total current liabilities Non-current deblt Ordinary shares Retained eamings Total liabilities and equity $700000 95000 200000 $1 000000 $550 000 $75 000 $1 375 000 53 000000 Information relating to financial projections for the year 2012 (1) Projected sales are $6 million (2) Cost of goods sold includes $1 million in fixed costs. (3) Operating expense includes $250 000 in fixed costs (4) Interest expense will remain unchanged (5) The firm will pay cash dividends amounting to 40% of net profits after taxes (6) Cash and inventories will double (7) Marketable securities, notes payable, non-current debt and ordinary shares will remain unchanged (8) Accounts receivable, accounts payable and other current liabilities will change in direct response to the change in sales (9) A new computer system costing $356 000 will be purchased during the year. Total depreciation a Prepare a pro forma income statement for the year ending 31 December 2012, using the b Prepare a pro forma balance sheet as of 31 December 2012, using the information given and the c Analyse these statements and discuss the resulting external financing required expense for the year will be $110000 information given and the per-cent-of-sales method judgmental approach. Include a reconciliation of the retained earnings account