al Planning Financing Deficit Stevens Textile Corporatie oration's 2018 financial statements are shown here: December 31, 2018 (Thousands of Dollars) Balance Sheet $ 1,080 Cash Receivables Inventories 2,880 Total current assets Net fixed assets $1,080 Accounts payable 54,320 6,480 Accruals 9,000 Line of credit $16,560 Notes payable 12,600 Total current liabilities 59,300 Mortgage bonds Common stock Retained earnings $29,160 Total liabilities and equity $29,160 2.100 3,500 3,500 12,860 Total assets come Statement for December 31, 2018 (Thousands of Dollars) Sales Operating costs Earnings before interest and taxes Interest Pre-tax earnings Taxes (40%) $36,000 32,440 $ 3,560 460 $ 3,100 1,240 $ 1,860 $ 837 $ 1,023 Net income Dividends (45%) Addition to retained earnings a. Suppose 2019 sales are projected to increase by 15% over 2018 sales. Use the forecasted financial statement method to forecast a balance sheet and income statement for December 31, 2019. The interest rate on all debt is 10%, and cash earns no interest income. Assume that all addi- Lonal debt in the form of a line of credit is added at the end of the year, which means that you should base the forecasted interest expense the balance of debt at the beginning of the year. Use the forecasted me statement to determine the addition to retained earnings. Assume 18. that it cannot ed financing will assets, spontaneous ase by the same that the company was operating at full capacity in 2018, that is sell off any of its fixed assets, and that any required financin be borrowed as notes payable. Also, assume that assets, spo liabilities, and operating costs are expected to increase by the cous percentage as sales. Determine the additional funds needed. b. What is the resulting total forecasted amount of the line of credit? c. In your answers to parts a and b, you should not have charged any inter est on the additional debt added during 2019 because it was assumed | the new debt was added at the end of the year. But now suppose that the new debt is added throughout the year. Don't do any calculations, but how would this change the answers to parts a and b
