Financing Deficit

Stevens Textile Corporation's 2019 financial statements are shown below:

Balance Sheet as of December 31, 2019 (Thousands of Dollars)

Cash$1,080Accounts payable$4,320Receivables6,480Accruals2,880Inventories9,000Line of credit0Total current assets$16,560Notes payable2,100Net fixed assets12,600Total current liabilities$9,300Mortgage bonds3,500Common stock3,500Retained earnings12,860Total assets$29,160Total liabilities and equity$29,160

Income Statement for December 31, 2019 (Thousands of Dollars)

Sales$36,000Operating costs34,000Earnings before interest and taxes$2,000Interest160Pre-tax earnings$1,840Taxes (25%)460Net income$1,380Dividends (40%)$552Addition to retained earnings$828

Stevens grew rapidly in 2019 and financed the growth with notes payable and long-term bonds. Stevens expects sales to grow by 20% in the next year but will finance the growth with a line of credit, not notes payable or long-term bonds. Use the forecasted financial statement method to forecast a balance sheet and income statement for December 31, 2020. The interest rate on all debt is 6%, and cash earns no interest income. The 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 2019, that it cannot sell off any of its fixed assets, and that assets, spontaneous liabilities, and operating costs are expected to increase by the same percentage as sales. Determine the required line of credit. Do not round intermediate calculations. Round your answers to the nearest dollar.

Total assets:$

LOC:$