As a result of falling profits, the directors of the business would like to completely renovate each store during June $2010$ at a total cost of $$300,000.$ However, before making such a large capital expenditure commitment, they require financial projections for the forthcoming year.

The following information is available concerning the year ending May $31,2011$:

$$The forecast sales for the year are $$1,400,000$ and the gross profit is expected to be $30\%$ of sales. Eighty percent of all sales are on credit. At present the average collection period is six weeks but it is likely that this will change to eight weeks in the forthcoming year.

$$At the year$-$end, inventory is expected to be $25\%$ higher than at the beginning of the year.

$$During the year the company intends to pay $$40,000$ for a fleet of delivery vans.

$$Administration expenses for the year are expected to be $$225,000($including $$12,000$ for depreciation of buildings and $$38,000$ for depreciation of furniture and fixtures$).$ Selling expenses are expected to be $$85,000($including $$10,000$ for depreciation of delivery vans$).$

$$All purchases are on credit. It has been estimated that the average payment period taken will be $12$ weeks during the forthcoming year.

$$Income taxes for the year are expected to be $$34,000.$ Half of this will be paid during the year and the remaining half will be outstanding at the year$-$end.

$$Dividends declared and paid for the year are expected to be $$0\mathrm{.}06$ per share.

$$There are $500,000$ shares outstanding.

All calculations should be made to the nearest thousand dollars.

Required:

$($a$)$Prepare a pro forma income statement for the year ended May $31,2011.$

$($b$)$Prepare a pro forma statement of retained earnings for the year ended May $31,2011.$

$($c$)$Prepare a pro forma balance sheet as at May $31,2011.$

Note: The cash balance will be the balancing figure.