$($Financial forecasting discretionary financing needs$)$ The balance sheet of the Boyd Trucking Company $($BTC$)$ shows that BC had sales for the year ended

December $31,2018,$ of $$25$ million. The firm Boyd Trucking Company Balance Sheet, December $31,2018$ follows a policy of paying all net earnings $($$ Millions$)$ out to its common stockholders in cash divi$-$dends. Thus, BTC generates no funds from its earnings that can be used to expand its opera$-$tions. $($Assume that depreciation expense is just equal to the cost of replacing worn$-$out assets$)$

Current assets $$10$

Net fixed assets$15$

Total $$25$

Accounts payable $$5$

Notes payable $0$

Bonds payable $10$

Common equity $10$

Total $$25$

a$.$ If BTC anticipates sales of $$40$ million during the coming year, develop a pro

forma balance sheet for the firm as of December $31,2019.$ Assume that current assets vary as a percent of sales, net fixed assets remain unchanged, and accounts payable vary as a percent of sales. Use notes payable as a balancing

entry.

b$.$ How much "new" financing will BTC need next year?

c$.$ What limitations does the percent of sales forecast method suffer from? Discuss briefly.