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The company is planning to open another location in 2018 Prepare pro forma financials for 2018 for the new location using the following information 1 Cost of leasing commercial space $1500 per m

The company is planning to open another location in 2018 . Prepare pro forma financials for 2018 for the new location using the following information:
                       
  1. Cost of leasing commercial space: $1,500 per month.
                       
  2. Cost of new equipment: $15,000, purchased with a long-term note. Use straight line depreciation assuming a seven-year life, no residual value. Use full year’s depreciation for the first year. Equipment purchase was financed with a long-term note.
                       
  3. Cost of hiring and training new employees: three at $25,000 each for the first year.
                       
  4. Except as noted below in 1, 2, 3, and 5, assets, current liabilities, sales, costs, and expenses are expected to be 80% of the existing store (from preliminary statements) except no stock. Retained earnings = net income
                       
  5. Cash: $7,000. Accounts receivable amount to 4.0 turns (accounts receivable turnover will be 4.0); inventory amount to show 3.0 turns (inventory turnover will be 3.0). No stock will be issued. Retained earnings are to equal net income. Additional financing of $5,000 will be long-term. Add remaining amount needed to balance into accounts payable.

Feb 10 2020 View more View Less

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