Leonard Industries wishes to prepare a pro forma balance sheet for December 31, 2016. The firm expects 2016 sales to total

$ 3 comma 000 comma 000$3,000,000.

The following information has been gathered.

(1) A minimum cash balance of

$ 50 comma 400$50,400

is desired.

(2) Marketable securities are expected to remain unchanged.

(3) Accounts receivable represent

9.7 %9.7%

of sales.

(4) Inventories represent

11.8 %11.8%

of sales.

(5) A new machine costing

$ 90 comma 500$90,500

will be acquired during 2016. Total depreciation for the year will be

$ 31 comma 800$31,800.

(6) Accounts payable represent

14.1 %14.1%

of sales.

(7) Accruals, other current liabilities, long-term debt, and common stock are expected to remain unchanged.

(8) The firm's net profit margin is

3.8 %3.8%,

and it expects to pay out

$ 70 comma 400$70,400

in cash dividends during 2016.

(9) The December 31, 2015, balance sheet follows

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.

a. Use the judgmental approach to prepare a pro forma balance sheet dated December 31, 2016, for Leonard Industries.

b. How much, if any, additional financing will Leonard Industries require in 2016? Discuss.

c. Could Leonard Industries adjust its planned 2016 dividend to avoid the situation described in part

b?

Explain how.