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Financing Deficit

Garlington Technologies Inc.$\text{'}$s $2019$ financial statements are shown below:

Income Statement for December $31,2019$

Sales $$4,000,000$

Operating costs $3,200,000$

EBIT $ $800,000$

Interest $120,000$

Pre$-$tax earnings $ $680,000$

Taxes $(25\%)170,000$

Net income $510,000$

Dividends $ $190,000$

Balance Sheet as of December $31,2019$

Cash $ $160,000$ Accounts payable $ $360,000$

Receivables $360,000$ Line of credit $0$

Inventories $720,000$ Accruals $200,000$

Total CA $$1,240,000$ Total CL $ $560,000$

Fixed assets $4,000,000$ Long$-$term bonds $1,000,000$

Total Assets $$5,240,000$ Common stock $1,100,000$

RE $2,580,000$

Total L&E $$5,240,000$

Suppose that in $2020$ sales increase to $$4\mathrm{.}6$ million and that $2020$ dividends will increase to $$158,000.$ Forecast the financial statements using the forecasted financial statement method. Assume the firm operated at full capacity in $2019.$ The long$-$term bonds have an interest rate of $8\%.$ New financing will be with a line of credit. Assume it will be added at the end of the year. Cash does not earn any interest income. Enter your answers as positive values. Do not round intermediate calculations. Round your answers to the nearest dollar.

Garlington Technologies Inc.

Pro Forma Income Statement

December $31,2020$

Sales $

Operating costs $

EBIT $

Interest $

Pre$-$tax earnings $

Taxes $(25\%)$ $

Net income $

Dividends: $

Addition to RE: $

Garlington Technologies Inc.

Pro Forma Balance Statement

December $31,2020$

Cash $

Receivables $

Inventories $

Total current assets $

Fixed assets $

Total assets $

Accounts payable $

Line of credit $

Accruals $

Total current liabilities $

LT bonds $

Common stock $

Retained earnings $

Total L&E $