Assets Liabilities and Stockholders Equity Cash $44,900 Accounts payable $395,500 Marketable securities 14,700 Accruals 60,300 Accounts receivable 255,300 Other current liabilities 29,500 Inventories 339,500 Total current liabilities $485,300 Total current assets $654,400 Long-term debt 348,900 Net fixed assets 599,600 Common stock 199,900 Retained earnings 219,900 Total assets $1,254,000 Total liabilities and stockholders' equity $1,254,000

Pro forma balance

sheetBasic

Leonard Industries wishes to prepare a pro forma balance sheet for December 31,

2020.

The firm expects

2020

sales to total

$3,000,000.

The following information has been gathered.

(1) A minimum cash balance of

$50,300

is desired.

(2) Marketable securities are expected to remain unchanged.

(3) Accounts receivable represent

9.9%

of sales.

(4) Inventories represent

11.8%

of sales.

(5) A new machine costing

$90,100

will be acquired during

2020.

Total depreciation for the year will be

$32,000.

(6) Accounts payable represent

14.2%

of sales.

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

(8) The firm's net profit margin is

4.3%,

and it expects to pay out

$69,700

in cash dividends during

2020.

(9) The December 31,

2019,

balance sheet follows

LOADING...

.

a. Use the judgmental approach to prepare a pro forma balance sheet dated December 31,

2020,

for Leonard Industries.

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

2020?

Discuss.

c. Could Leonard Industries adjust its planned

2020

dividend to avoid the situation described in part

b?

Explain how.

Pro Forma Balance Sheet
Leonard Industries
December 31, 2020
Assets
Current assets
Cash	$	50,300
Marketable securities		14,700
Accounts receivable		297,000
Inventories		354,000
Total current assets	$	716,000
Net fixed assets		599600
Total assets	$	1254000

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