Prepare a pro forma income statement for the year ending December 31, 2013, using the provided fixed cost data to improve the accuracy of the percentage of sales method.

Prepare a pro forma balance sheet as of December 31, 2013, using the provided information and the critical method. Include a retained earnings adjustment account.

Analyze these financial statements and comment on the resulting external financing requirements.

Data:

Projected sales are $6,000,000.

Cost of goods sold in 2012 includes $1,000,000 in fixed costs.

Operating expenses in 2012 include $250,000 in fixed costs.

Interest expenses remain unchanged.

The company will pay cash dividends equal to 40% of net profits after taxes.

Inventories and cash will double.

Marketable securities, accounts payable, long-term debt, and common stock will remain unchanged.

Accounts receivable, accounts payable, and other current liabilities will change in direct response to the change in sales.

A new computer system will be purchased during the year at a cost of $356,000. Total depreciation expenses for the year will be $110,000.

The tax rate will remain at 40%.