Financing Deficit Stevens Textile Corporation's 2018 financial statements are shown below: alog $ 4,320 2,880 Balance Sheet as of December 31, 2018 (Thousands of Dollars) Cash $ 1,080 Accounts payable Receivables 6,480 Accruals Inventories 9,000 Line of credit Total current assets $16,560 Notes payable Net fixed assets 12,600 Total current liabilities Mortgage bonds Common stock Retained earnings Total assets $29,160 Total liabilities and equity ess 2,100 $ 9,300 3,500 3.500 12,860 $29,160 Income Statement for January 1 - December 31, 2018 (Thousands of Dollars) YOU Sales Operating costs Earnings before interest and taxes Interest Pre-tax earings Taxes (40%) Net Income Dividends (45%) Addition to retained earnings $36,000 32,440 $ 3,560 460 $ 3,100 1,240 $ 1,860 $ 837 $ 1,023 ds 04 d h e 50 ir salas lise the facechodnia stomat mother to forecast balances Th 09: Selected End-of-Chapter Problems - Corporate Valuation and Financial Planning Sales $36.000 Operating costs 32.440 Earnings before interest and taxes $ 3,560 Interest 460 Pre-tax earnings Taxes (40%) 1.240 Net income $ 1.860 Dividends (45%) $ 837 Addition to retained earnings $1,023 $ 3.100 a. Suppose 2019 sales are projected to increase by 15% over 2018 sales. Use the forecasted financial statement method to forecast a balance sheet and income statement for December 31, 2019. The interest rate on all debt is 11% and cash earns no interest income. Assume that all additional debt in the form of a line of credit is added at the end of the year, which means that you should base the forecasted interest expense on the balance of debt at the beginning of the year. Use the forecasted income statement to determine the addition to retained camnings. Assume that the company was operating at full capacity in 2018, that it cannot sell off any of its fixed assets, and that any required financing will be borrowed as notes payable. Also, assume that assets, spontaneous liabilities, and operating costs are expected to increase by the same percentage as sales. Determine the additional funds needed. Do not round intermediate calculations. Round your answers to the nearest dollar Total assets: $ AFN: $ b. What is the resulting total forecasted amount of the line of credit? Do not round Intermediate calculations. Round your answer to the nearest dollar. c. In your answers to Parts and b, you should not have charged any interest on the additional debt added during 2019 because it was assumed that the new debt was added at the end of the year. But now suppose that the new debt is added throughout the year. Don't do any calculations, but how would this change the answers to parts a and b? if debt is added throughout the year rather than only at the end of the year, interest expense will be Select than in the projections of part a. This would cause net Income to be set the addition to retained earnings to be senect , and the AFN to be Select . Thus, you would have to select new debt