Josephine is trying to get a new company up and running. She needs to prepare fi

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Josephine is trying to get a new company up and running. She needs to prepare financial documents to submit to a bank for a loan (line of credit) to cover the working capital requirements. She has a potential angel investor for the investment in machines and equipment so that is not part of the line of credit loan amount.

The estimated working capital needed for each of the first two years is shown below and the year 2 values are expected to be constant at the year 2 level in the future.

Interest on this line of credit should be ignored.

The revenue COGS, Gross margin and S.G.& A. (does not include depreciation) is shown below.

Prepare an Income Statement and Cash Flow Statement for years 0-2 that can be submitted to the bank (meaning that all subtotals should be shown). All available data is shown below. Assume that the company will continue with Josephine as the owner beyond year 2.

Investment in year 0 $1,000,000 Assume this entire   amount is depreciable Forecasted   revenues, cost and expenses not including depreciation. 0 1 2 Revenue $650,000 $1,300,000 COGS ($260,000) ($520,000) SG&A ($180,000) ($240,000) Depreciation (MACRS) 5 year 20.00% 32.00% 19.20% 11.52% 11.52% 5.76% $200,000 $320,000 $192,000 $115,200 $115,200 $57,600 Accounts Receivable $0 $250,000 $400,000 Accounts Payable $20,000 $180,000 $180,000 Wages Payable $5,000 $50,000 $65,000 Inventory $10,000 $100,000 $150,000 Income Tax rate 20% Capital Gains Tax rate 12%

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