Red Queen Restaurants wishes to prepare financial plans. Use the financial statements and the other information provided here Red Queen Restaurants Income Statement; for the Year Ended December 31, 2019; Sales revenue ;$800,800 Less: Cost of goods sold;600,100 Gross profits ;$200,700 Less: Operating expenses;101,000 Net profits before taxes ;$99,700 Less: Taxes (40%);39,880 Net profits after taxes ;$59,820 Less: Cash dividends;20,000 To retained earnings ;$39,820

to prepare the financial plans. The following financial data are also available for next year:

Red Queen Restaurants Income Statement, "for the Year Ended December 31, 2019", Sales revenue ,"$800,800" Less: Cost of goods sold,"600,100" Gross profits ,"$200,700" Less: Operating expenses,"101,000" Net profits before taxes ,"$99,700" Less: Taxes (40%),"39,880" Net profits after taxes ,"$59,820" Less: Cash dividends,"20,000" To retained earnings ,"$39,820"

(1) The firm has estimated that its sales will be $900,400.

(2) The firm expects to pay $34,700 in cash dividends.

(3) The firm wishes to maintain a minimum cash balance of $31,300.

(4) Accounts receivable represent approximately 23% of annual sales.

(5) The firm's ending inventory will change directly with changes in sales.

(6) Red Queen will purchase new machine costing $43,700 and have total depreciation of $15,000.

(7) Accounts payable will change directly in response to changes in sales.

(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.

a. Prepare a pro forma income statement for next year, using the percent-of-sales method.

b. Prepare a pro forma balance sheet for next year, using the judgmental approach.

c. Analyze these statements, and discuss the resulting external financing required.