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Preparing Martin Manufacturing's 2013 Pro Forma Financial Statements. To improve its competithe position. Martin Manufacturing is planning lo implement a major equipment modernizasion program. Included will be replacement and modernization of key manufacturing equipment at a cost of $400,000 in 2013 The planned program is expected lo lawer the variable cost per unit of finished product. Teri Spiro, an experienced budget analyst has been charged with preparing a forecast of the firm's 2013 financial posalion, assuming. replacement and modemization of manufacturing equipment She plans to use the 2012 financial statements, along with the key projected financial data summarized in the following table To Do a. Use the historical and projected finandal data provided to preparo a pro forma income statement for the yoar ended December 31 , 2013 . (Hint Use the porcent -01-sales mothod to estimate all values except depreciation expense and interest expense, which have been estimated by management and included in the table b. Use the projected financial data along with relevant data from the pro forma income statemant prepared in part (a) to prepate the pro forma balance theot at December 31 2013. (Hint. Use the judgmental approach) c. Wal Martin Manufacturing Company noed to obtain external financing to fund the proposed equipment modemization program? Explain \begin{tabular}{|lr} \hline \multicolumn{2}{|c}{ Martin Manufacturing Company Key Projected Financial Data (2013) } \\ Data item & Value \\ \hline Sales revenue & $6,500,000 \\ Minimum cash balance & $25,000 \\ Inventory turnover (times) & 7.0 \\ Average collection period & 50 days \\ Fixed-asset purchases & $400,000 \\ Total dividend payments (preferred and common) & $20,000 \\ Depreciation expense & $185,000 \\ Interest expense & $97,000 \\ Accounts payable increase & 20% \\ Accruals and long-term debt & Unchanged \\ Notes payable, preferred and common stock & Unchanged \end{tabular} Data table Earnings per share (EPS) (Click on the icon here in order to copy the contents of the data table below into a spreadsheet) Martin Manufacturing Company Key Projected Financial Data (2013) \begin{tabular}{lr} Data item & Value \\ \hline Sales revenue & $6,500,000 \\ Minimum cash balance & $25,000 \\ Inventory turnover (times) & 7.0 \\ Average collection period & 50 days \\ Fixed-asset purchases & $400,000 \\ Total dividend payments (preferred and common) & $20,000 \\ Depreciation expense & $185,000 \\ Interest expense & $97,000 \\ Accounts payable increase & 20% \\ Accruals and long-term debt & Unchanged \\ Notes payable, preferred and common stock & Unchanged \end{tabular} Liabilities and Stockholders' Equity Current liabilities Accounts payable Notes payable Accruals Total current liabilities Long-term debt Total liabilities $230,000311,00075,000$616,000$1,165,250$1,781,250 Stockholders' equity Preferred stock (2,500 shares, $1.20 dividend) Common stock (100,000sharesat$4.00par) Paid-in capital in excess of par value Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $50,000400,000593,750300,000$1,343,750$3,125,000 *The firm's 100,000 outstanding shares of common stock closed 2012 at a price of $11.38 per share