I don't understand this. Please thoroughly explain. Im trying to complete with paper and pencil. Carry all calculations to two decimal places to reduce rounding error, especially in multistep problemsProvincial Imports Inc. Balance Sheet for the Year Just Ended

As:

Assets

Cash $$200,000$

Liabilities and stockholders" equity

Marketable securities

Accounts receivable

inventories

Total ourrent assets

Net fixed assets

Total assets

$200,000225,000$

Accounts payable

$625,000$ Notes payable

$500,000$ Other current liabilities

$$1,550,000$ Total current liabilities

$1,400,000$ Long$-$term debt

$$2,950,000$ Total liabilities

Common stock

Retained earnings

Total liabilities and equity

s $700,000$

Information related to financial projections for next year is as follows:

$(1)$ Projected sales are $$6,000,000.$

$(2)$ Cost of goods sold last year includes $$1,000,000$ in fixed costs.

$(3)$ Operating expense last year includes $$250,000$ in fixed costs.

$(4)$ Interest expense will remain unchanged.

$(5)$ The firm will pay cash dividends amounting to $40\%$ of net profits after taxes.

$(6)$ Cash and inventories will double.

$(7)$ Marketable securities$,$ notes payable, long$-$term debt, and common stock will remain

unchanged.

$($s$)$ Accounts receivable, accounts payable, and other current liabilities will change in direct

response to the change in sales.

$(9)$ A new computer system costing $$356,000$ will be purchased during the year. Total

depreciation expense for the year will be $$110,000.$

$(10)$ The tax rate will remain at $21\%$ and taxes payable are $38\%$ of the tax liability on the income

statement.

a$.$ Prepare a pro forma income statement for next year using the fixed cost data given to improve

the accuracy of the percent$-$of$-$sales method.

b$.$ Prepare a pro forma balance sheet for next year using the information given and the

judgmental approach. Include a reconciliation of the retained earnings account.

c$.$ Analyze these statements, and discuss the resulting external financing required.