Garlington Technologies Inc.'s 2004 financial statements are shown below. Garlington Technologies Inc.: Balance Sheet as of December 31, 2004
Suppose that in 2005 sales increase by 10 percent over 2004 sales and that 2005 dividends will increase to $112,000. Construct the pro forma financial statements using the percent of sales method. Assume the firm operated at full capacity in 2004. Use an interest rate of 13 percent on the debt balance at the beginning of the year. Assume dividends will grow by 3 percent and that the AFN will be in the form of notes payable.
