Leonard Industries wishes to prepare a pro forma balance sheet for December 31,

20202020.

The firm expects

20202020

sales to total

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

The following information has been gathered.

(1) A minimum cash balance of

$ 49 comma 600$49,600

is desired.

(2) Marketable securities are expected to remain unchanged.

(3) Accounts receivable represent

9.9 %9.9%

of sales.

(4) Inventories represent

11.9 %11.9%

of sales.

(5) A new machine costing

$ 89 comma 500$89,500

will be acquired during

20202020.

Total depreciation for the year will be

$ 32 comma 100$32,100.

(6) Accounts payable represent

14.4 %14.4%

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

4.1 %4.1%,

and it expects to pay out

$ 69 comma 900$69,900

in cash dividends during

20202020.

(9) The December 31,

20192019,

balance sheet follows

Leonard Industries Balance Sheet December 31, 20192019

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Assets

Liabilities and Stockholders' Equity

Cash

$ 45 comma 100$45,100

Accounts payable

$ 394 comma 600$394,600

Marketable securities

14 comma 70014,700

Accruals

59 comma 90059,900

Accounts receivable

255 comma 200255,200

Other current liabilities

30 comma 00030,000

Inventories

339 comma 900339,900

Total current liabilities

$ 484 comma 500$484,500

Total current assets

$ 654 comma 900$654,900

Long-term debt

350 comma 900350,900

Net fixed assets

599 comma 900599,900

Common stock

199 comma 700199,700

Retained earnings

219 comma 700219,700

Total assets

$ 1 comma 254 comma 800$1,254,800

Total liabilities and stockholders' equity

$ 1 comma 254 comma 800$1,254,800

.

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

20202020,

for Leonard Industries.

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

20202020?

Discuss.

c. Could Leonard Industries adjust its planned

20202020

dividend to avoid the situation described in part

b?

Explain how.

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

20202020,

for Leonard Industries.Complete the assets part of the pro forma balance sheet for Leonard Industries for December 31,

20202020

below:(Round to the nearest dollar.)

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Pro Forma Balance Sheet
Leonard Industries
December 31, 2020
Assets
Current assets
Cash	$
Marketable securities
Accounts receivable
Inventories
Total current assets	$
Net fixed assets
Total assets	$