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    Proforma Income statement and Balance sheet

    The following are the balance sheet and income statements for the year that just ended:

    Operating Costs1,150
    Taxes (30%)69
    Net income161
      Cash  60  Accounts payable  50
      Account receivable  80  Notes payable  70
      Inventories  100  Long-term debt  150
      Fixed assets  250  Common stock  50
            Retained earnings  170
      Total assets  490  Total liab. & equity  490

    Fixed assets are being used at full capacity and can be increased only by increments of 50%. Sales for the next year are expected to increase by 30%.

    Use the percent of sales method to construct a 1st pass pro forma income statement and balance sheet. For the 2nd pass, assume that all the additional needed funds will come in the form of notes payable at an interest rate of 8%.

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