Last year, Software International had sales of $10,000,000, and expects a 40% increase in sales next year.Balance sheet items for Software International vary directly with sales increases as:

Cash

Accounts receivable

Inventory

Accounts payable

Other accruals

7.3%

29.1%

11%

21%

7%

Net fixed assets does not follow sales, but the firm will spend $1.1 million next year to expand its office space. The firm's net profit margin is 9%, and it pays out an annual cash dividend equal to 30% of net income. Make

a pro forma balance sheet for next year assuming a 40% increase in sales and that any additional financing needed will be provided byfirstdrawing down their money market account, and if more is needed, increasing theirshort-term loan.

LATEST BALANCE SHEET

AssetsLiabilities and Owners' EquityCash$ 304,836

Accounts payable$1,260,433

Money market454,937

Accruals711,605

Accounts receivable2,200,522

Short-term loan0

Inventory1,541,670

Total current liabilities$1,972,038

Total current assets$4,501,965

Long-term debt$2,800,000

Net fixed assets2,695,486

Stockholders' equity2,425,413

Total assets$7,197,451

Total liabilities and equity$7,197,451

a.Inventory is expected to be $1,981,670

b.Total current assets is expected to be $5,943,028

c.Total assets is expected to be $9,738,514

d.Accruals is expected to be $991,605

e.A and B

f.A and C

g.A and D

h.B and C

i.B and D

j.C and D

k.all but A

l.all but B

m.all but C

n.all but D

o.all are true

p.none are true

16 points

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