Assets Liabilities and Stockholders Equity Cash $44,500 Accounts payable $394,500 Marketable securities 15,200 Accruals 60,300 Accounts receivable 254,800 Other current liabilities 30,100 Inventories 340,300 Total current liabilities $484,900 Total current assets $654,800 Long-term debt 349,900 Net fixed assets 599,700 Common stock 200,200 Retained earnings 219,500 Total assets $1,254,500 Total liabilities and stockholders' equity $1,254,500

Pro forma balance

sheetBasic

Leonard Industries wishes to prepare a pro forma balance sheet for next year. The firm expects sales to total

$3,000,000.

The following information has been gathered.

(1) A minimum cash balance of

$50,400

is desired.

(2) Marketable securities will remain unchanged.

(3) Accounts receivable represent

9.9%

of sales.

(4) Inventories represent

11.8%

of sales.

(5) Leonard will acquire a new machine costing

$89,600.

Total depreciation for the year will be

$31,800.

(6) Accounts payable represent

14.2%

of sales.

(7) Accruals, other current liabilities, long-term debt, and common stock will remain unchanged.

(8) The firm's net profit margin is

3.8%,

and it expects to pay out

$70,400

in cash dividends next year.

(9) The most recent balance sheet follows

LOADING...

.

a. Use the judgmental approach to prepare a pro forma balance sheet for next year.

b. How much, if any, additional financing will Leonard Industries require? Discuss.

c. Could Leonard Industries adjust its planned dividend to avoid the situation described in part

b?

Explain how.