Garlington Technologies Inc.'s 2016 financial statements are shown below: Balance Sheet as of December 31, 2016 Cash

Question:

Garlington Technologies Inc.'s 2016 financial statements are shown below:

Balance Sheet as of December 31, 2016

Cash ................................. $ 180,000 ........... Accounts payable ...........$ 360,000

Receivables ........................... 360,000 .......... Notes payable .................... 156,000

Inventories ............................ 720,000 .......... Line of credit ........................... 0

Total current assets .............. $1,260,000 .......... Accruals ......................... 180,000

Fixed assets ........................ 1,440,000 ........... Total current liabilities ..... $ 696,000

................................................................ Common stock .............. 1,800,000

................................................................Retained earnings .............. 204,000

Total assets $2,700,000 .................................... Total liabilities and equity $2,700,00

Income Statement for December 31, 2016

Sales ........................................ $3,600,000

Operating costs ............................. 3,279,720

EBIT ......................................... $ 320,280

Interest .......................................... 18,280

Pre-tax earnings ............................ $ 302,000

Taxes (40%) .................................. 120,800

Net income .................................. $ 181,200

Dividends ................................... $ 108,000

Suppose that in 2017 sales increase by 10% over 2016 sales and that 2017 dividends will increase to $112,000. Forecast the financial statements using the forecasted financial statement method. Assume the firm operated at full capacity in 2016. Use an interest rate of 13%, and assume that any new debt will be added at the end of the year (so forecast the interest expense based on the debt balance at the beginning of the year). Cash does not earn any interest income. Assume that the all-new debt will be in the form of a line of credit?

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Accounts Payable
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive... Line of Credit
A line of credit (LOC) is a preset borrowing limit that can be used at any time. The borrower can take money out as needed until the limit is reached, and as money is repaid, it can be borrowed again in the case of an open line of credit. A LOC is...