PREPARE a PRO FORMA INCOME STATEMENT TABLE for the year ending December 31, 2013, using the fixed cost data provided to improve the accuracy of the percentage of sales method. Prepare a PRO FORMA BALANCE SHEET TABLE as of December 31, 2013, using the information provided and the critical method. Include a retained earnings adjustment account. Analyze these financial statements and comment on the resulting required external financing. Data: Projected sales are $6,000,000. Costs of goods sold in 2012 include $1,000,000 in fixed costs. Operating expenses in 2012 include $250,000 in fixed costs. Interest expenses remain unchanged. The company will pay cash dividends in an amount equal to 40% of net profits after taxes. Inventories and cash will double. Marketable securities, notes payable, long-term debt and common stock will remain unchanged. Accounts receivable, accounts payable, and other current liabilities will change in direct response to the change in sales. During the year a new computer system will be purchased at a cost of $356,000. Total depreciation expenses for the year will be $110,000. The tax rate will remain at 40%.

Complementary data

\begin{tabular}{|c|c|} \hline \begin{tabular}{l} 1. Projected sales are \\ $6,000,000. \end{tabular} & They remain the same for the proforma income Statement \\ \hline \begin{tabular}{l} 2 Cons of goods sole \\ - 2012 include \\ $1,000,000 in fixed costs. \end{tabular} & \\ \hline \begin{tabular}{l} 3. Operating expenses in 2012 \\ include $250,000 in fixed costs. \end{tabular} & \begin{tabular}{l} Operating expenses $250,000 of which there are $250,000 \\ of fixed costs. \end{tabular} \\ \hline \begin{tabular}{l} 4. Interest expenses \\ remain unchanged. \end{tabular} & Pace $500000 \\ \hline \begin{tabular}{l} 5. The company will pay \\ cash dividends in an amount \\ equal to 40% of net profits \\ after taxes. \end{tabular} & \begin{tabular}{l} Item 5 must be resolved last. Since you first have \\ 1o make the income Statement and determine the \\ profit, then apply 40% of the tax rate and subtract \\ it. They will apply 40 to this result to obtain the \\ amount of cash dividends. They ave then subtracted from \\ the result. \end{tabular} \\ \hline \begin{tabular}{l} E Invertories and cash \\ They wil doubin. \end{tabular} & \\ \hline \begin{tabular}{l} 7. Marketabie securities, \\ notes payabie, long-term \\ debt and common stock will \\ remain unchanged. \end{tabular} & \\ \hline & \begin{tabular}{l} Accounts receivable $400,000,00 and Accounts payable \\ saso.000. \end{tabular} \\ \hline \begin{tabular}{l} 9. During the year a new \\ computer system will be purchased \\ at a cost of $356,000. Total \\ depreciation expenses for the yoar \\ wil be $110,000. \end{tabular} & \begin{aligned} Fixed assets - Soltware/Hardwares $356,000 Depreciation expense for the year \( \$ 110.000\end{aligned} \). \\ \hline \begin{tabular}{l} 10. The tax rate \\ will remain at 40s. \end{tabular} & It's about prolic. See what is indicated in ilem 15 . \\ \hline Add the following accounts & Negotiable securities $100,0000 \\ \hline & Buldings and Faclifies $8820,000 \\ \hline & Accumulated depreciation $150,000 \\ \hline \end{tabular}