Question Two solution is more important.

1. Pro Forma Statements [LO-1] Consider the following simplified financial statements for the Fire Corporation (assuming no income taxes): The company has predicted a sales increase of 15 percent. It has predicted that every item on the balance sheet will increase by 15 percent as well. Create the pro forma statements and reconcile them. What is the plug variable here? 2. Pro Forma Statements and EFN [LO1, 2] In the previous question, assume Fire pays out half of net income in the form of a cash dividend. Costs and assets vary with sales, but debt and equity do not. Prepare the pro forma statements and determine the external financing needed