Consider the following financial statements for Industrial Supply Company.

	(Actual)
	December 31,
Balance sheet	Year 1			Comments
Assets
Cash		$ 550,000		25% increase (assumption)
Accounts receivable		1,900,000		25% increase (assumption)
Inventories		3,850,000		25% increase (assumption)
Total current assets		$ 6,300,000
Fixed assets, net		$ 1,200,000		No increase (assumption)
Total assets (A)		$ 7,500,000
Liabilities and Equity
Accounts payable (CL)		$ 1,400,000		25% increase (assumption)
Notes payable		1,100,000
Total current liabilities		$ 2,500,000
Long-term debt		500,000		No change (assumption)
Stockholders equity		4,500,000
Total liabilities and equity		$ 7,500,000
Income Statement	Year 1
Sales (S)		$14,900,000		25% increase (forecasted)
Expenses, including interest & taxes		14,000,000
Earnings after taxes (EAT)		$ 900,000
Dividends paid (D)		250,000		No change (assumption)
Retained earnings		$ 650,000
Selected Financial Ratios
Current ratio		2.52 times
Debt ratio		40.00%
Return on stockholders equity		20.00%
Net profit margin on sales		6.04%

Determine the amount of additional financing needed for Year 2 under the following conditions:

Increase in Sales	Increase in Expenses
$3,725,000	$3,500,000

Suppose that the company has excess fixed assets and that no increase in net fixed assets is required as sales are increased. Assume that the company plans to maintain its dividend payments at the same level in Year 2 as in Year 1. Round your answer to the nearest dollar.

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