to prepare the financial plans. The IntegrativePro forma statements Red Queen Restaurants wishes to prepare financial plans. Use the financial statements and the other information provided here following financial data are also available: (1) The firm has estimated that its sales for 2020 will be $899,800. (2) The firm expects to pay $34,700 in cash dividends in 2020. (3) The firm wishes to maintain a minimum cash balance of $30,200. (4) Accounts receivable represent approximately 24% of annual sales. (5) The firm's ending inventory will change directly with changes in sales in 2020. (6) A new machine costing $44,000 will be purchased in 2020. Total depreciation for 2020 will be $17,000. (7) Accounts payable will change directly in response to changes in sales in 2020. (8) Taxes payable will equal one-fourth of the tax liability on the pro forma income statement. (9) Marketable securities, other current liabilities, long-term debt, and common stock will remain unchanged. a. Prepare a pro forma income statement for the year ended December 31, 2020, using the percent-of-sales method. b. Prepare a pro forma balance sheet dated December 31, 2020, using the judgmental approach. c. Analyze these statements, and discuss the resulting external financing required. Red Queen Restaurants Income Statement for the Year Ended December 31, 2019 Sales revenue $799,500 Less: Cost of goods sold 599,400 Gross profits $200,100 Less: Operating expenses 100,600 Net profits before taxes $99,500 Less: Taxes (rate = 21%) 20,895 Net profits after taxes $78,605 Less: Cash dividends 19,600 To retained earnings $59,005 Red Queen Restaurants Balance Sheet December 31, 2019 Assets Liabilities and Stockholders' Equity Cash $31,800 Accounts payable $99,400 Marketable securities 17,600 Taxes payable 19,100 Accounts receivable 149,500 Other current liabilities 4,100 Inventories 99,300 Total current liabilities $122,600 Total current assets $298,200 Long-term debt $200,200 Net fixed assets 349,400 Common stock $149,800 Retained earnings $175,000 Total assets $647,600 Total liabilities and equity $647,600