FORCASTEING FINANCIAL STATEMENT ABC Corporations 2015 financial statements are shown below: Balance Sheet as of December 31, 2015 (Thousands of Dollars) Cash $ 2,080 Accounts payable $ 5,320 Receivables 6,480 Accruals 2,880 Inventories 9,000 Notes payable 2,100 Total current assets $ 17,560 Total current liabilities $ 9,300 Net fixed assets 14,600 Mortgage bonds 3,500 Common stock 5,500 Retain earnings 12,860 Total Assets $ 32,160 Total liabilities and equity $ 32,160 Income Statement for December 31, 2015 (Thousands of Dollars) Sales $36,000 Operating Costs 32,440 Earnings Before Interest and Taxes 3,560 Interest 460 Earnings Before Taxes 3,100 Taxes (40%) 1,240 Net Income 1,860 Dividends (45%) 837 Addition to Retained Earnings 1,023 Suppose 2016 sales are projected to increase by 15% over 2015 sales. Use the forecasted financial statement method to forecast an income statement for December 31, 2016. The interest rate on notes payable is 10% and mortgage bonds is 12%, and cash earns no interest income. Assume that all additional debt 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 retain earnings also.

Required Forecast an income statement for December 31st, 2016.