=+LG 5 P4–18 Pro forma balance sheet: Basic Leonard Industries wishes to prepare a pro forma balance sheet for December 31, 2020. The firm expects 2020 sales to total

$3,000,000. The following information has been gathered:

(1) A minimum cash balance of $50,000 is desired.

(2) Marketable securities are expected to remain unchanged.

(3) Accounts receivable represent 10% of sales.

(4) Inventories represent 12% of sales.

(5) A new machine costing $90,000 will be acquired during 2020. Total depreciation for the year will be $32,000.

(6) Accounts payable represent 14% of sales.

(7) Accruals, other current liabilities, long-term debt, and common stock are expected to remain unchanged.

(8) The firm’s net profit margin is 4%, and it expects to pay out $70,000 in cash dividends during 2020.

(9) The December 31, 2019, balance sheet follows.