Garlington Technologies Inc.'s 2016 financial statements are shown below:

Balance Sheet as of December 31, 2016

CASH$180,000ACCOUNT PAYABLE$360,000

RECEIVABLES360,000NOTES PAYBLE156,000

INVENTORIES720,000LINE OF CREDIT0

TOTAL CURRENT ASSETS$1,260,000ACCRUALS180,000

FIXED ASSETS1,440,000TOTAL CURRENT LIABILITIES$696,000

COMMON STOCK1,800,000

RETAINED EARNINGS204,000

TOTAL ASSETS2,700,000TOTAL LIABILITIES & EQUITY2,700,000

Income Statement for December 31, 2016

SALES$3,600,000

OPERATING COSTS3,279,720

EBIT320,280

INTEREST18,280

PRE-TAX EARNINGS302,000

TAXES (40%)120,800

NET INCOME181,200

DIVIDENDS108,000

Suppose that in 2017 sales increase by 15% over 2016 sales and that 2017 dividends will increase to $154,000. Forecast the financial statements using the forecasted financial statement method. Assume the firm operated at full capacity in 2016. Use an interest rate of 13%, and assume that any new debt will be added at the end of the year (so forecast the interest expense based on the debt balance at the beginning of the year). Cash does not earn any interest income. Assume that the all new-debt will be in the form of a line of credit.

Garlington Technologies Inc.

Pro Forma Income Statement

December 31, 2017

Sales

Operating costs

EBIT

Interest

Pre-tax earnings

Taxes (40%)

Net income

Dividends:

Addition to RE:

Garlington Technologies Inc.

Pro Forma Balance Statement

December 31, 2017

Cash

Receivables

Inventories

Total current assets

Fixed assets

Total assets

Accounts payable

Notes payable

Accruals

Total current liabilities

Common stock

Retained earnings

Total liabilities and equity