Cary Computers makes bulk purchases of small computers, stocks them in conveniently located warehouses, and ships them to its chain of retail stores. Sales for 2002 were $450 million. They are forecasted to increase to $500 million in 2003. Additional information and relevant financial ratios are given below:

Minimum cash balance required: $1.8 million

Average collection period (accounts receivable/sales/365): 60 days

Inventory turnover (COGS/inventory): 3.18

Net fixed assets: Current level of $216 million. The firm expects to acquire new plant and equipment worth $8 million in 2003.

Accounts payable: 4% annual sales

LT debt: existing LT debt is $110 million out of which the company expects to repay $15 million in 2003

Common stock: expected to remain constant at its 2002 level of $120 million.

COGS: 70% of sales

Depreciation: annual depreciation for 2003 expected to be $15 million

Net profit margin: 6% of projected sales in 2003

Dividends: expected to be 40% of net income.

Retained earnings at end of 2002: 130 million

1. Based on the information given above, forecast the income statement for year ended December 31, 2003
2. Based on the information given above, and your estimate of retained earnings from part (a), forecast the pro forma balance sheet as of December 31, 2003. Assume that any additional funds requirement will be met by notes payable. The firm does not have any note payable at end of 2002.