P4-20: Integrative: Pro forma statements Red Queen Restaurants wishes to prepare financial plans. Use the financial statements and the other information provided below to prepare the financial plans.

The following financial data are also available:

1. The firm has estimated that its sales for 2020 will be $900,000.
2. The firm expects to pay $35,000 in cash dividends in 2020.
3. The firm wishes to maintain a minimum cash balance of $30,000.
4. Accounts receivable represent approximately 18% of annual sales.
5. The firms ending inventory will change directly with changes in sales in 2020.
6. A new machine costing $42,000 will be purchased in 2020. Total depreciation for 2020 will be $17,000.
7. Accounts payable will change directly in response to changes in sales in 2020.
8. Taxes payable will equal one-fourth of the tax liability on the pro forma income statement.
9. Marketable securities, other current liabilities, long-term debt, and common stock will remain unchanged.

1. Prepare a pro forma income statement for the year ended December 31, 2020, using the percent-of-sales method.
2. Prepare a pro forma balance sheet dated December 31, 2020, using the judgmental approach.
3. Analyze these statements, and discuss the resulting external financing required.

Assets		Liabilities and stockholders equity
Red Queen Restaurants Income Statement for the Year Ended December 31, 2019
Sales revenue			$800,000
Less: Cost of goods sold			600,000
Gross profits			$200,000
Less: Operating expenses			100,000
Net profits before taxes			$100,000
Less: Taxes (rate = 21%)			21,000
Net profits after taxes			$ 79,000
Less: Cash dividends			20,000
To retained earnings			$ 59,000
Red Queen Restaurants Balance Sheet December 31, 2019
Cash	$ 32,000	Accounts payable		$100,000
Marketable securities	18,000	Taxes payable		20,000
Accounts receivable	150,000	Other current liabilities		5,000
Inventories	100,000	Total current liabilities		$125,000
Total current assets	$300,000	Long-term debt		200,000
Net fixed assets	350,000	Total liabilities		$325,000
Total assets	$650,000	Common stock		150,000
		Retained earnings		175,000
		Total liabilities and stockholders equity		$650,000

Please show your work. It does not help me if you just provide the answers.