Preparing Martin Manufacturing's 2004 Pro Forma Financial Statements To improve its comperitive position, Martin Manufactaring is planning to 1 implement a majoe equipment modernization program. Included will be replacement and modernization of key manufacraring, equipment ar a cost of $400,000 in 2004 . The planned program is expected to lower the variable cost per unit of finished prodect. Terri Spiro, an experienced budger analysr, has been charged with prepariag a forecasr of the firm's 2004 financial position, assuming replacement and modernizarion of manufacturing equipment. She plans to ase the 2003 financial statements presented on pages 92 and 93 , along. with the key projected financial dara stamenarized in the following, cable. Required a. Use the historical and projected financial data provided to prepare a pro forma income statement for the year ended December 31, 2004. (Hint: Use CHAPTEA 3 Cash Flow and Financial Planning 141 the percent-of-sales method to estimate all values except depreciation expense and interest expense, which have been estimated by management and included in the table.) b. Use the projected financial data along with relevant data from the pro forma income statement prepared in purt a to prepare the pro forma balance sheet at December 31, 2004. (Hinf: Use the jadgmemial appraach.) c. Will Martin Manufacturing Company need to obtain exfernal fonincing to fund the proposed equipment modernization program? Explain