The Nautical Co. Ltd. expects sales of $2.4 mill this year and the same amount the following year. All sales are on credit and are spread evenly throughout the year. On the basis of the following information, prepare a forecast income statement and balance sheet for year ended December 31st, 2017.

Cash : Minimum of 4 percent of annual sales

Accounts Receivable : 60 day average collection based on annual sales.

Inventories : Turnover of eight times a year.

Net Fixed Assets : $500,000 now. Capital expenditure equal to depreciation.

Accounts Payable : One months purchases.

Accrued expenses : 3 percent of sales.

Bank borrowing : $50,000 now. Can borrow as much as $250,000.

Long Term Debt : $300,000 now; payable balance $75,000 at year end.

Common Stock : $100,000. No addition planned.

Retained Earnings : $500,000 now ( the opening balance ).

Net profit margin : 8% of sales

Dividends : None

Cost of Goods Sold : 60% of sales.

Purchases : 50% of cost of goods sold.

Income Taxes : 50% of before tax profits.