Clyde's Well Servicing has the following financial statements. The balance sheet items, profit margin, and dividend payout have maintained the same relationships the past couple of years; these relationships are anticipated to hold in the future. Clyde's has excess capacity, so there is no expected increase in capital assets.

Income Statement

Sales

Cost of goods sold

$$2,000,000$

$1,260,000$

Gross profit

Selling and administrative expense

Amortization

$740,000$

$400,000$

$55,000$

Earnings before interest and taxes

Interest

$285,000$

$50,000$

Earnings before taxes

Taxes

$235,000$

$61,000$

Earnings available to common shareholders

$$174,000$

Dividends paid

$$104,000$

$100$

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Assets

Cash

Accounts receivable

Inventory

Current assets

Capital assets

Total assets

$$30,000$

$260,000$

$210,000$

$500,000$

$550,000$

$$1,050,000$

Balance Sheet

Liabilities and Shareholders' Equity

Accounts payable

Accruals

Bank loan

Current liabilities

Long$-$term debt

Common stock

Retained earnings

Total liabilities and equity

$$105,000$

$20,000$

$150,000$

$275,000$

$200,000$

$175,000$

$400,000$

$$1,050,000$

a$.$ Using a percent$-$of$-$sales method, determine whether Clyde's can handle a $30$ percent sales increase without using external financing. If so$,$ what is the need?

The firm

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in $($Click to select$)$ v

b$.$ If the average collection period of receivables could be held to $43$ days, what would the need be for external financing? All other relationships remain the same. $($Negative answer should be indicated by a minus sign.$)$

New funds required $($surplus$)$

Suppose the following results with the increased sales of $$600,000.$ The first $$75,000$ of any new funds would be short$-$term debt and then long$-$term debt.

Income Statement

Cash increases by

Average collection period

Inventory turnover $($COGS$)$

Capital assets increase by Accounts payable increase

Accruals

Long$-$term debt decreases by

Gross profit margin

Selling, general, and administrative expense increase by Amortization increases by Interest decreases by Tax rate

Dividends increase to

$$5,000$

$43$ days

$6$ X

$$125,000$

in proportion to sales

No change

$$25,000$

$40\%$

$$50,000$

$$12,500$

$$10,000$

$35\%$

$$120,000$

c$-1.$ What new funds would be required? $($Enter your answers in thousands, rounded to $2$ decimal places.$)$

New funds required

c$-2.$ Prepare the pro forma balance sheet. $($Input all answers in thousands. Be sure to list the assets and liabilities in order of their liquidity. Round the final answer to $1$ decimal place. $)$

Balance Sheet $($$ thousands$)$

Assets

Liabilities and Equity

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$($Click to select$)$

$

$$

v

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Current assets $($Click to select$)$

Current liabilities

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$<$

Total assets

$

Total liabilities and shareholders'

$

equity