Using the information in the balance sheet for December 31, 2013 (Exhibit 2) and the fiscal year 2014 budgets (Exhibits 3 and 4), prepare a projected balance sheet for The Farm Winery for March 31, 2014 and June 30, 2014. Based on the projections, can Madsen declare a dividend of $25,000 in June 2014? If not, does The Farm Winery require additional capital contributions in the first half of 2014?

Exhibit 3 Fiscal Year 2014 Final Budget IQ 2014 2Q 2014 201 4Q 2014 TOTAL Net sales Cost of goods sold (incl. depreciation) $ 50,000 34,200 S 36,000 18,700 44,000 27, 1(%) 95,000 45,100 225,000 125,100 S Gross margin Operating expenses $ 15,800 13,000 S 17,300 13.000 S 16,900 13.000 S 49,900 21,000 S 99,900 60,000 Net income (loss) S 2,800 S 4.300 S 3.900 S 28,900 S 39,900 Source: The Farm Winery Exhibit 3 Fiscal Year 2014 Final Budget IQ 2014 2Q 2014 201 4Q 2014 TOTAL Net sales Cost of goods sold (incl. depreciation) $ 50,000 34,200 S 36,000 18,700 44,000 27, 1(%) 95,000 45,100 225,000 125,100 S Gross margin Operating expenses $ 15,800 13,000 S 17,300 13.000 S 16,900 13.000 S 49,900 21,000 S 99,900 60,000 Net income (loss) S 2,800 S 4.300 S 3.900 S 28,900 S 39,900 Source: The Farm Winery