Consider the following financial statements for Industrial Supply Company.

$($Actual$)$

December $31,$

Balance sheet Year $1$ Comments

Assets

Cash $ $450,00015\%$ increase $($assumption$)$

Accounts receivable $1,900,00015\%$ increase $($assumption$)$

Inventories $2,150,00015\%$ increase $($assumption$)$

Total current assets $ $4,500,000$

Fixed assets, net $ $1,500,00015\%$ increase $($assumption$)$

Total assets $($A$)$ $ $6,000,000$

Liabilities and Equity

Accounts payable $($CL$)$ $ $1,200,00015\%$ increase $($assumption$)$

Notes payable $700,000$

Total current liabilities $ $1,900,000$

Long$-$term debt $500,000$ No change $($assumption$)$

Stockholders$$ equity $3,600,000$

Total liabilities and equity $ $6,000,000$

Income Statement Year $1$

Sales $($S$)$ $$14,700,00015\%$ increase $($forecasted$)$

Expenses, including interest & taxes $14,000,000$

Earnings after taxes $($EAT$)$ $ $700,000$

Dividends paid $($D$)250,000$ No change $($assumption$)$

Retained earnings $ $450,000$

Selected Financial Ratios

Current ratio $2\mathrm{.}37$ times

Debt ratio $40\mathrm{.}00\%$

Return on stockholders$$ equity $19\mathrm{.}44\%$

Net profit margin on sales $4\mathrm{.}76\%$

Determine the amount of additional financing needed and pro forma financial statements $($that is$,$ balance sheet, income statement, and selected financial ratios$)$ for Year $2$ under the following conditions:

Increase in Sales Increase in Expenses

$$2,205,000$ $$2,100,000$

Assume the following:

The company plans to maintain its dividend payments and long$-$term debt at the same level in Year $2$ as in Year $1.$

All of the additional financing needed is in the form of short$-$term notes payable.

Levels of cash, accounts receivable, inventories, net fixed assets and accounts payable increase proportionately as sales increase.

Round your answers in dollar form to the nearest dollar. Round your answers for financial ratios to two decimal places.

Additional Financing Needed: $

$($Actual$)($Pro forma$)$

December $31,$ December $31,$

Balance sheet Year $1$ Year $2$

Assets

Cash $ $450,000$ $

Accounts receivable $1,900,000$

Inventories $2,150,000$

Total current assets $ $4,500,000$ $

Fixed assets, net $ $1,500,000$ $

Total assets $($A$)$ $ $6,000,000$ $

Liabilities and Equity

Accounts payable $($CL$)$ $ $1,200,000$ $

Notes payable $700,000$

Total current liabilities $ $1,900,000$ $

Long$-$term debt $500,000$

Stockholders$$ equity $3,600,000$

Total liabilities and equity $ $6,000,000$ $

Income Statement Year $1$ Year $2$

Sales $($S$)$ $$14,700,000$ $

Expenses, including interest & taxes $14,000,000$

Earnings after taxes $($EAT$)$ $ $700,000$ $

Dividends paid $($D$)250,000$

Retained earnings $ $450,000$ $

Selected Financial Ratios

Current ratio $2\mathrm{.}37$ times

times

Debt ratio $40\mathrm{.}00\%$

$\%$

Return on stockholders$$ equity $19\mathrm{.}44\%$

$\%$

Net profit margin on sales $4\mathrm{.}76\%$

$\%$