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

Income Statement
Sales	$	200,000
Expenses		164,700
Earnings before interest and taxes	$	35,300
Interest		3,300
Earnings before taxes	$	32,000
Taxes		10,000
Earnings after taxes	$	22,000
Dividends	$	8,800

Balance Sheet
Assets		Liabilities and Shareholders' Equity
Cash	$7,000	Accounts payable	$11,300
Accounts receivable	23,000	Accrued wages	2,500
Inventory	28,000	Accrued taxes	12,200
Current assets	$58,000	Current liabilities	$26,000
Capital assets	83,000	Notes payable	8,300
		Long-term debt	21,500
		Common stock	33,000
		Retained earnings	52,200
Total assets	$141,000	Total liabilities and equity	$141,000

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