ST3. Use the percentage of sales forecasting method to compute the additional financ- ing needed by Lambrechts Specialty Shops, Inc. (LSS), if sales are expected to increase from a current level of $20 million to a new level of $25 million over the coming year. LSS expects earnings after taxes to equal $1 million over the next year (2014). LSS intends to pay a $300,000 dividend next year. The current year balance sheet for LSS is as follows:

Lambrechts Specialty Shops, Inc. Balance Sheet as of December 31, 2013

cash 1,000,000	Accounts Payable 3,000,000
accounts receivable 1,500,000	Notes payable 3,000,000
inventories 6,000,000	Long term debt 2,000,000
net fixed assets 3,000,000	Stockholders' equity 3,500,000
Total assets 11,500,000	Total liabilities and equity 11,500,000

All assets, except cash, are expected to vary proportionately with sales. Of total liabilities and equity, only accounts payable is expected to vary proportionately with sales.