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 $248,000. 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 12%. 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 $ 120000

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 $ 1000000

Common stock $ 1100000

Retained earnings $

Total L&E $

Answer 1

1 Ale w v 11:46 ENG 24-02-202026 AAS : X fx R P Q S T Y Z AA AB AC AD AE A income statement sales operating costs EBIT interest EBT tax net income dividends addition to retained earnings U V W X 10% INCREASE 2019 2020 4000000 4400000 3200000 3520000 800000 880000 120000 120000 (1000000 X 12%] 680000 760000 170000 190000 510000 570000 190000 248000 GIVEN 320000 322000 BALANCE SHEET cash receivables inventory Total current assets 10% INCREASE 2019 2020 160000 176000 360000 396000 720000 792000 1240000 1364000 accounts payable LINE OF CREDIT accruals Total current liabilities LONG TERM BONDS common stock retained earnings total liabilities & equity 10% INCREASE 2019 2020 360000 396000 0 146000 BALANCING FIGURE 200000 220000 560000 762000 1000000 1000000 1100000 1100000 2580000 2902000 [2580000 + 322000] 5240000 5764000 THIS MUST BE EQUAL TO TOTAL ASSETS net fixed assets Total assets 4000000 4400000 5240000 5764000 146000 ANSWER EXTERNAL FINANCING REQUIRED = COLBY DEBT EQUITY | YOO EXCELNI garlington UPTON LINE OF CREDIT = CAPACITY