THE MIGHTY FINE LEMONADE COMPANY BALANCE SHEET YEAR 1 ASSETS Cash Receivables Inventory Fixed Assets Depreciation Net Fixed Assets Total Assets
$1,700 19,000 5,000 4,500 (1,500) 3,000 $28,700
LIABILITIES
2,000 4,000 500 $6,500
Payables Debts Income Tax Due Total Liabilities EQUITY
5,000 17,200 22,200
Stock Retained Earnings Total Equity Total Liabilities & Equity
$28,700
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THE MIGHTY FINE LEMONADE COMPANY INCOME STATEMENT YEAR 1
$50,000 (10,000) 40,000
Sales COGS Gross Profit Operating Expenses
(18,500) 21,500
Operating Income Depreciation Interest Expense Total
(1,500) (800) (2,300)
Profit before Tax Taxes Net Income
19,200 (2,000) $17,200
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THE MIGHTY FINE LEMONADE COMPANY CASH STATEMENT YEAR 1
Beginning Cash Collections (Sales-A/R) Inventory Paid Operating Expenses Paid Interest Paid Income Tax Paid
$0 31,000 (15,000) (16,500) (800) (1,500) ($2,800)
Total OCF Fixed Asset Investment
($4,500) ($4,500)
Total ICF Financing From Equity Financing From Bank Loan Repayment
$5,000 8,000 (4,000)
$9,000
Total FCF
$1,700
Ending Cash
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THE MIGHTY FINE LEMONADE COMPANY TRANSACTIONS:
1
We invest $5,000 Cash to create The Mighty Fine Lemonade Company. The company issues 5,000 shares of Common Stock.
2
We borrow $8,000 from the Bank. The note is due over 2 years. The interest rate is 10%. Payments are made at the end of each year. Year 1 principal payment is $4,000 and Year 1 interest payment is $800.
3
We purchased a computer, printer and software for the business. Total price was $4,500. Paid Cash. The estimated useful life is 3 years (no salvage value). Straight line depreciation.
4.1
We purchased enough inventory to actually make 75,000 quarts. Inventory raw materials cost 20¢ per quart. Paid cash.
4.2
We sold 50,000 quarts at $1.00 each. Of the $50,000 in sales, $31,000 was in cash and $19,000 were receivables.
5
Expenses for rent, office supplies, sales, payroll and advertising totalled $18,500 for the year. We paid for $16,500.
6
Estimated income tax came to $2,000. We paid $1,500.
Prepare an Ending Balance Sheet, Income Statement and Cash Flow Statement.
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