Financing Deficit

Garlington Technologies Inc.'s 2019 financial statements are shown below:

Income Statement for December 31, 2019

Sales$4,000,000Operating costs3,200,000EBIT$800,000Interest120,000Pre-tax earnings$680,000Taxes (25%)170,000Net income510,000Dividends$190,000

Balance Sheet as of December 31, 2019

Cash$160,000Accounts payable$360,000Receivables360,000Line of credit0Inventories720,000Accruals200,000Total CA$1,240,000Total CL$560,000Fixed assets4,000,000Long-term bonds1,000,000Total Assets$5,240,000Common stock1,100,000RE2,580,000Total L&E$5,240,000

Suppose that in 2020 sales increase to $4.8 million and that 2020 dividends will increase to $246,000. 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 12%. 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, 2020Sales$Operating costs$EBIT$Interest$Pre-tax earnings$Taxes (25%)$Net income$Dividends:$Addition to RE:$

Garlington Technologies Inc.

Pro Forma Balance Statement

December 31, 2020Cash$Receivables$Inventories$Total current assets$Fixed assets$Total assets$Accounts payable$Line of credit$Accruals$Total current liabilities$LT bonds$Common stock$Retained earnings$Total L&E$