Q#$2.$ You are preparing to discuss borrowing needs with your bank's loan officer who asks you to prepare pro$-$forma financial statements. Below are the financial statements for the year just ended. Your sales department is projecting a $25\%$ increase in sales. Days sales outstanding are expected to improve to $90.$ With respect to inventory and accounts payable, assume that purchases will be $$8,500,000$ and cash payments will be $$8,800,000.$ Operations are running at $75\%$ of capacity and have recently been streamlined. Accordingly, gross profit margins are expected to be $11\%$ in the future. Other expenses are expected to remain the same percentage of sales. The retention ratio is $40\%.$ For ease of calculation, assume interest expense remains the same. Prepare pro$-$forma financial statements and determine the amount of borrowing needs, which will be reflected in long$-$term debt.

$\backslash$table$[[$Cash$,200,000,$Sales,$7,500,000$