The Longbranch Western Wear Company has the following financial statements, which are representative of the companys historical average.

Income Statement
Sales	$	400,000
Expenses		336,100
Earnings before interest and taxes	$	63,900
Interest		3,900
Earnings before taxes	$	60,000
Taxes		12,000
Earnings after taxes	$	48,000
Dividends	$	24,000

Balance Sheet
Assets	Liabilities and Shareholders' Equity
Cash	$5,000	Accounts payable	$15,900
Accounts receivable	29,000	Accrued wages	3,100
Inventory	34,000	Accrued taxes	17,000
Current assets	$68,000	Current liabilities	$36,000
Capital assets	89,000	Notes payable	8,900
		Long-term debt	24,500
		Common stock	39,000
		Retained earnings	48,600
Total assets	$157,000	Total liabilities and equity	$157,000

Longbranch is expecting a 25 percent increase in sales next year, and management is concerned about the companys need for external funds. The increase in sales is expected to be carried out without any expansion of capital assets; instead, it will be done through more efficient asset utilization in the existing stores. Of liabilities, only current liabilities vary directly with sales.

a. Using a percent-of-sales method, determine whether Longbranch Western Wear has external financing needs. (Input the amount as a positive value.)

The firm (Click to select) needs has $ in (Click to select) surplus funds external funds .

b. Prepare a pro forma balance sheet with any financing adjustment made to notes payable and excess, if any, shall reduce long term debt. (Input all answers as positive values. Be sure to list the assets and liabilities in order of their liquidity. Do not leave any empty spaces; input a 0 wherever it is required.)

Balance Sheet
Current assets	Liabilities
(Click to select) Notes payable Cash Inventory Capital Asset Accounts receivable	$	(Click to select) Accounts payable Accrued taxes Retained earnings Common stock Accrued wages	$
(Click to select) Accounts receivable Prepaid expenses Inventory Cash Capital Asset		(Click to select) Accrued wages Retained earnings Accounts payable Common stock Long-term debt
(Click to select) Prepaid expenses Gross plant Inventory Accounts receivable Cash		(Click to select) Accrued taxes Retained earnings Accounts payable Common stock Long-term debt
Current assets	$	Current liabilities	$
(Click to select) Capital Assets Inventory Accrued wages Accounts Receivable Cash		(Click to select) Accounts payable Retained earnings Long term liabilities Notes payable Notes receivable
		(Click to select) Long-term debt Accrued wages Accounts payable Accrued taxes	$
		(Click to select) Common stock Accrued wages Accounts payable Accrued taxes
		(Click to select) Retained earnings Accrued wages Accounts payable Accrued taxes
Total assets	$	Total liabilities and equity	$

c. Calculate the current ratio and total debt to assets ratio for each year. (Round the final answers to 2 decimal places.)

	Year 1	Year 2
Current ratio	X	X
Total debt/ assets	%	%