Chapter 1 HW Ko Questions 16-18 (of 23) CC1-1 Financial Statements for a Busines

Question

Chapter 1 HW Ko Questions 16-18 (of 23) CC1-1 Financial Statements for a Business Plan [LO 1-2, LO 1-3] IThe following information applies to the questions displayed below.] Nicole Mackisey is thinking of forming her own spa business, Nicole's Getaway Spa (NGS). Nicole expects that she and two family members will each contribute $11,000 to the business and receive 1,000 shares each. Nicole forecasts the following amounts for the first year of operations, ending December 31, 2015: Cash on hand and in the bank, $2.750; amounts due from customers from spa treatments, $1,840; building and equipment, $76,000; amounts owed to beauty supply outlets for spa equipment, $4,720, notes payable to a local bank for $39,470. Cash dividends of $8.000 will be paid to the stockholders during the year. Nicole also forecasts that first year sales revenues will be $58,600; wages will be $27,000; the cost of supplies used up will be $10.000; office expenses will be $8,000, and income taxes will be $2,200. References CC1-1 Financial Statements for a Business Plan [LO 1-2, LO 1-3] Section Break

Explanation / Answer

NICOLES GETAWAY SPA Income statement (Forecasted) for the year ended 2015 Amount in $ Amount in $ Sales Revenue 58600 Less: Cost of Supplies 10000 Less: Wages 27000 Less: Office expenses 8000 -45000 Income Before taxes 13600 Income tax 2200 Net Income 11400 NICOLES GETAWAY SPA statement of retatined earnings (Forecasted) on 31st dec, 2015 Amount in $ Retained Earnings , January 1,2015 0 Add: Net Income 11400 Less: Cash Dividends -8000 Retained Earnings , December 31,2015 3400 NICOLES GETAWAY SPA Balance sheet (Forecasted) Amount in $ Assets Cash & Bank 2750 Account Receivables 1840 Building & Equipment 76000 Total 80590 Liabilities & Equity Account Payables 4720 Notes payables 39470 Sahre capital 3000 Shares 33000 Reatined Earnings 3400 Total 80590

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