The most important part of the question is showing calculations so please make sure to fill that section out as well. Thank you so much!

Percentage of Sales Problem

Below is the current income statement and balance sheet for your firm. Prepare the income statement and balance sheet for next year using the Percentage of Sales Forecasting Method. Show all work and calculations.

A. Sales are expected to grow to $1,800,000 next year.

B. The firm will pay out 50% of its net income as dividends next year.

C. Any net new financing will be derived from issuing additional common stock.

Income Statement	Current Year	Next Year	Calculation
Sales	1,500,000
Costs except depreciation	(800,000)
EBITDA	700,000
Depreciation	(150,000)
EBIT	550,000
Interest expense (net)	(50,000)
Pretax income	500,000
Income tax	(200,000)
Net Income	300,000
Balance Sheet	Current Year	Next Year	Calculation
Assets
Cash and equivalents	1,200,000
Accounts receivable	800,000
Inventories	400,000
Total current assets	2,400,000
Property plant/equipment	1,800,000
Total assets	4,200,000
Liabilities and Equity
Accounts payable	1,500,000
Debt	500,000
Total liabilities	2,000,000
Stockholders' equity	2,200,000
Total liabilities and equity	4,200,000
Second Pass Balance Sheet	Current year	Next year	Calculation
Assets
Cash and equivalents
Accounts receivable
Inventories
Total current assets
Property plant/equipment
Total assets
Liabilities and equity
Accounts payable
Debt
Total liabilities
Stockholders' equity
Total liabilities and equity