The Global Growth Corporation is planning for next year and wants you to help them prepare a Pro Forma Balance Sheet for 2015.Their current Balance Sheet is shown below along with some pre-determined changes in key balance sheet accounts. How will you proceed?

The Global Growth Corporation

Balance Sheet for the Year Ending 2014

Next year, the firm will increase its Plant, Property, and Equipment (PPE) by $7,000,000 with a plant expansion. The inventories will grow by 70%, but accounts payables will grow by 60%, and marketable securities will be reduced by 50% to help finance the expansion. If all other asset accounts remain the same and long-term debt will be used to finance the remaining costs of the expansion (no change in common stock or retained earnings), prepare a pro forma balance sheet for 2015. How much additional debt will be estimated using this pro forma balance sheet?

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Current Assets 2014 Cash $1,500,000 Marketable Securities 830,000 Accounts Receivable 3,450,000 Inventories 2,500,000 Total Current Assets $8,280,000 Long-term Assets Plant, Property & Equip. $8,500,000 Goodwill 3,500,000 Intangible Assets Total Long-temm Assets 1,350,000 $13,350,000 $21,630,000 TOTAL ASSETS Current Liabilities Accounts Payable $5,125,000 Other Current Liabilities $1,350,000 Total Current Liabilities $6,475,000 Long-term Liabilities $3,200,000 Long-Term Debt Other Long-tem Liab. $1,650,000 Total Long-Term Liabilities $4,850,000 $11,325,000 TOTAL LIABILITIES Owner's Equity Common Stock $2,500,000 Retained Earnings $7,805,000 TOTAL OWNER'S $10,305,000 $21,630,000 EQUITY TOTAL LIABILITIES & OWNER’S EQUITY