Leonard Industries wishes to prepare a pro forma balance sheet for December 31, 2016. The firm expects 2016 sales to total $3,000,000.

The following information has been gathered.

(1) A minimum cash balance of $49,800 is desired.

(2) Marketable securities are expected to remain unchanged.

(3) Accounts receivable represent 9.8% of sales.

(4) Inventories represent 12.2% of sales.

(5) A new machine costing $89,800 will be acquired during 2016. Total depreciation for the year will be $32,200.

(6) Accounts payable represent 14.3% 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 4.4%, and it expects to pay out $70,400 in cash dividends during 2016.

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

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?

Leonard Industries Balance Sheet December 31, 2015 Liabilities and Stockholders' Equity Assets Cash Marketable securities Accounts receivable Inventories 5394,700 60,400 30,200 5485,300 349,200 199,700 220,200 $1,254,400 $44,500 Accounts payable 14,800 Accruals 255.500 Other current liabilities 339,500 Total current liabilities Total current assets $654,300 Long-term debt Net fixed assets 600,100 Common stock Retained earnings Total liabilities and stockholders' equity Total assets 1,254,400