Financing Deficit

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

Income Statement for December 31, 2019

Sales$4,000,000

Operating costs3,200,000

EBIT$800,000

Interest120,000

Pre-tax earnings $680,000

Taxes (25%)170,000

Net income510,000

Dividends$190,000

Balance Sheet as of December 31, 2019

Cash$160,000

Accounts payable $360,000

Receivables360,000

Line of credit 0

Inventories720,000

Accruals200,000

Total CA$1,240,000

Total CL$560,000

Fixed assets4,000,000

Long-term bonds1,000,000

Total Assets$5,240,000

Common stock1,100,000

RE2,580,000

Total L&E$5,240,000

Suppose that in 2020 sales increase to $4.4 million and that 2020 dividends will increase to $204,000. 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 13%. 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$--------------?