Employer 1 c. Student ( I Renew a 1 O Chegg St1-Certificat" | RICUNYFir Solverd /tab-wm#inbou/15 1 6892ft deb2904 ?projector .. 1 Red Queen Restaurants wishes to prepare financial plans. Use the financial statements and the other information provided below to prepare the financial plans. The following financial data are also available: (1) The firm has estimated that its sales for 2016 will be $900,000. (2) The firm expects to pay $35,000 in cash dividends in 2016. (3) The firm wishes to maintain a minimum cash balance of $30,000. (4) Accounts receivable represent approximately 18% of annual sales. (5) The firm's ending inventory will change directly with changes in sales in 2016. (6) A new machine costing $42,000 will be purchased in 2016. Total depreciation for 2016 will be $17,000. (7) Accounts payable will change directly in re ons changes in sales in 2016. (8) Taxes payable will equal one-fourth of the x lia -ty on the pro forma income statement. (9) Marketable securities, other current liabil s, Ic s-term debt, and common stock will remain unchanged Required a. Prepare a pro forma income statement fo he y ar ended December 31, 2016, using the percent-of sales method. b. Prepare a pro forma balance sheet dated ecer er 31, 2016, using the judgmental approach. c. Analyze these statements, and discuss the resul ng external financing required. Red Restaurants Income Statement for the Year Ended December 31, 2015 Sales revenue Less: Cost of goods sold $800,000 Gross profits $200,000 100,000 $100,000 40,000 S 60,000 20,000 S 40,000 Less: Operating expenses Net profits before taxes Less: Taxes (rate = 40%) Net profits after taxes Less: Cash dividends To retained earnings