a. Prepare a pro forma balance sheet dated December? 31, 2017.

b. Discuss the financing changes suggested by the statement prepared in part

?

Pro forma balance sheet Peabody & Peabody has 2015 sales of $10.5 million. It wishes to analyze expected performance and financing needs for 2017-2 years ahead. Given the following information, respond to parts a. and b (1) The percents of sales for items that vary directly with sales are as follows: Accounts receivable, 12.5%, Inventory: 18.1%; Accounts payable, 13.6%; Net profit margin, 3.1% (2) Marketable securities and other current liabilities are expected to remain unchanged (3) A minimum cash balance of $477,000 is desired (4) A new machine costing $651,000 will be acquired in 2016, and equipment costing $848,000 will be purchased in 2017. Total depreciation in 2016 is forecast as $295,000, and in 2017 $388,000 of depreciation will be taken (5) Accruals are expected to rise to $499,000 by the end of 2017 (6) No sale or retirement of long-term debt is expected. (7) No sale or repurchase of common stock is expected (8) The dividend payout of 50% of net profits is expected to continue (9) Sales are expected to be $11.7 million in 2016 and $11.3 million in 2017