Question

Financing Deficit Garlington Technologies Inc.'s 2019 financial statements are shown below:

Income Statement for December 31, 2019

Sales $4,000,000

Operating costs 3,200,000

EBIT $ 800,000

Interest 120,000

Pre-tax earnings $ 680,000

Taxes (25%) 170,000

Net income 510,000

Dividends $ 190,000

Balance Sheet as of December 31, 2019

Cash $ 160,000

Accounts payable $ 360,000

Receivables 360,000

Line of credit 0

Inventories 720,000

Accruals 200,000

Total CA $1,240,000

Total CL $ 560,000

Fixed assets 4,000,000

Long-term bonds 1,000,000

Total Assets $5,240,000

Common stock 1,100,000

RE 2,580,000

Total L&E $5,240,000

Suppose that in 2020 sales increase to $4.4 million and that 2020 dividends will increase to $110,000. Forecast the financial statements using the forecasted financial statement method. Assume the firm operated at full capacity in 2019. The long-term bonds have an interest rate of 8%. New financing will be with a line of credit. Assume it will be added at the end of the year. Cash does not earn any interest income. Enter your answers as positive values. Do not round intermediate calculations. Round your answers to the nearest dollar.

Garlington Technologies Inc. Pro Forma Income Statement December 31, 2020

Sales ___$

Operating costs ___$

EBIT___ $

Interest___ $

Pre-tax earnings___ $

Taxes (25%) ___$

Net income ___$

Dividends: ___$

Addition to RE: ___$

Garlington Technologies Inc. Pro Forma Balance Statement December 31, 2020

Cash ___$

Receivables ___$

Inventories ___$

Total current assets ___$

Fixed assets ___$

Total assets ___$

Accounts payable ___$

Line of credit ___$

Accruals___ $

Total current liabilities ___$

LT bonds ___$

Common stock ___$

Retained earnings___ $

Total L&E ___$

Answer 1