Clydes 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. Clydes has excess capacity, so there is no expected increase in capital assets. Income Statement Sales $2,000,000 Cost of goods sold 1,260,000 Gross profit 740,000 Selling and administrative expense 400,000 Amortization 55,000 Earnings before interest and taxes 285,000 Interest 50,000 Earnings before taxes 235,000 Taxes 61,000 Earnings available to common shareholders $174,000 Dividends paid $104,000 Balance Sheet Assets Liabilities and Shareholders' Equity Cash $30,000 Accounts payable $105,000 Accounts receivable 260,000 Accruals 20,000 Inventory 210,000 Bank loan 150,000 Current assets 500,000 Current liabilities 275,000 Capital assets 550,000 Long-term debt 200,000 Common stock 175,000 Retained earnings 400,000 Total assets $1,050,000 Total liabilities and equity $1,050,000 a. Using a percent-of-sales method, determine whether Clydes can handle a 30 percent sales increase without using external financing. If so, what is the need? The firm (Click to select) $ in (Click to select) . 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. New funds required $ 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 $5,000 Average collection period 43 days Inventory turnover (COGS) 6 X Capital assets increase by $125,000 Accounts payable increase in proportion to sales Accruals No change Long-term debt decreases by $25,000 Gross profit margin 40 % Selling, general, and administrative expense increase by $50,000 Amortization increases by $12,500 Interest decreases by $10,000 Tax rate 35 % Dividends increase to $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 (Click to select) $ (Click to select) $ (Click to select) (Click to select) (Click to select) (Click to select) Current assets Current liabilities (Click to select) (Click to select) (Click to select) (Click to select) Total assets $ Total liabilities and shareholders' equity $