Financing Deficit Stevens Textile Corporation's 2018 financial statements are shown below: Balance Sheet as of December 31, 2018 (Thousands of Dollars) Cash Receivables Inventories Total current assets Net fixed assets Interest Line of credit Notes payable Total current liabilities Mortgage bonds Common stock Retained earnings Total assets $29,160 Total liabilities and equity $29,160 Income Statement for January 1 - December 31, 2018 (Thousands of Dollars) Sales Operating costs Earnings before interest and taxes Pre-tax earnings $1,080 6,480 9,000 $16,560 12,600 Taxes (40%) Net income Accounts payable Accruals Dividends (45%) Addition to retained earnings $36,000 32,440 $ 3,560 460 $ 3,100 1,240 $ 1,860 $ 4,320 2,880 $ 837 $ 1,023 0 2,100 $ 9,300 3,500 3,500 12,860 4 a. Suppose 2019 sales are projected to increase by 20% 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 12%, 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 earnings. 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.

Financing Deficit Stevens Textile Corporation's 2018 financal statements are shown below: Balance Sheet as of December 31, 2018 (Thousands of Dollars) Income Statement for Jansary 1 - December 31, 2018 (1housands of Dollars) a. Suppose 2019 sales are projected to increase by 20% over 2018 sales. Use the forecasted financial statement method to forecast a balance sheet and income statement for December 31, 2019. The interest nate on all debt is 12%, 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 eamings: Assume that the company was operating ot full capacity in 2018 , that it cannot sell off any of ies fixed assets, and that any required financing will be borrowed as notes poyable. Aso, assume that assets, spontancous habilities, and operating costs are expected to increase by the same percentage as sales. Determine the addicional funds needed. Do not round intermedate cakculations. Round your answers to the nearest dollar. Totalassets:5 AFN:5 b. What is the resulting total forecasted amount of the line of credit? Do not round intermediate calculations. Round your answer to the nearest dollat. 5 c. In your answers to Parts a and b, you stiould not have charged any ieterest on the additional debi added during 2019 because in 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 vear: Don't do any cakutations, but now would thes change the answers to parts a and b ? If debt is added throughout the year rather than orly at the end of the yest, interest expense will be net income to be S. the addition to retained earnings to be Ci and the AfN to be G than in the projections of part a. Thas would cause (5) new debt