Prepare a percentage of sales forecast for 2021. The CEO wants sales to increase in 2021 by 10%. The CEO feels that all expenses down to Earnings before Taxes will increase using the 2020 percentage of sales. This includes COGS, Other Fixed Costs, Depreciation and Interest. Taxes are 30% of Earnings before Taxes and Dividends will remain 50% of Net Income. Assets and Accounts Payable for 2021 will be based on the 2020 percentages of sales. Common Stock will remain $105,000. The forecast will calculate the level of Long-term Debt and Retained Earnings. a. Will the company be able to finance the growth in 2021?

2020 2019 2018 Income Statement: Sales COGS Gross Margin Other Fixed Costs Depreciation 120,000 -84,000 36,000 -16,000 -5,000 15,000 -5,000 10,000 -3,000 7,000 -3,500 3,500 EBIT 100,000 -70,000 30,000 -16,000 -5,000 9,000 -5,000 4,000 -1,200 2,800 -1,000 1,800 90,000 -63,000 27,000 -16,000 -4,000 7,000 -5,000 2,000 -600 1,400 Interest Earnings before Taxes Taxes Net Income Dividends Retained Earnings 1,400 Statement of Financial Position: Cash Accounts Receivable Inventory Fixed assets 16,700 10,000 3,000 205,000 234,700 7,000 9,900 3,300 200,000 220,200 3,100 8,800 3,000 200,000 214,900 Total Accounts Payable Long-term Debt Common Stock Retained Earnings Total 18,000 105,000 105,000 6,700 234,700 15,000 102,000 100,000 13,500 100,000 100,000 3,200 220,200 1,400 214,900