Pro forma balance sheet Peabody & Peabody has 2019 sales of $ 10.5 million. It wishes to analyze expected performance and financing needs for 2021long dash2 years ahead. Given the following information, respond to parts a. and b.

(1) The percents of sales for items that vary directly with sales are as follows: Accounts receivable; 11.9 %, Inventory; 17.7 %; Accounts payable, 13.9 %; Net profit margin, 2.6 %.

(2) Marketable securities and other current liabilities are expected to remain unchanged.

(3) A minimum cash balance of $ 485 comma 000 is desired.

(4) A new machine costing $ 652 comma 000 will be acquired in 2020, and equipment costing $ 849 comma 000 will be purchased in 2021. Total depreciation in 2020 is forecast as $ 288 comma 000, and in 2021 $ 390 comma 000 of depreciation will be taken.

(5) Accruals are expected to rise to $ 503 comma 000 by the end of 2021.

(6) No sale or retirement of long-term debt is expected.

(7) No sale or repurchase of common stock is expected.

(8) The dividend payout of 50 % of net profits is expected to continue.

(9) Sales are expected to be $ 11.3 million in 2020 and $ 11.4 million in 2021.

(10) The December 31, 2019, balance sheet is here LOADING....

a. Prepare a pro forma balance sheet dated December 31, 2021.

b. Discuss the financing changes suggested by the statement prepared in part (a).

Assets Liabilities and Stockholders Equity

Cash $403,000 Accounts payable $1,405,000

Marketable securities 197,000 Accruals 400,000

Accounts receivable 1,205,000 Other current liabilities 80,400

Inventories 1,799,000 Total current liabilities $1,885,400

Total current assets $3,604,000 Long-term debt 2,005,600

Net fixed assets 4,005,000 Common stock 3,718,000

Total assets $7,609,000 Total liabilities and stockholders' equity $7,609,000