Required Ihformation CC1-1 Financial Statements for a Business Plan [LO 1-2, LO

Question

Required Ihformation CC1-1 Financial Statements for a Business Plan [LO 1-2, LO 1-3] [The 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 $10,000 to the business and receive 1,000 shares each. Nicole forecasts the following amounts for the first year of operations, ending December 31, 2018: Cash on hand and in the bank, $4,050; amounts due from customers from spa treatments, $1,970; building and equipment, $73,000; amounts owed to beauty supply outlets for spa equipment, $4,850; notes payable to a local bank for $39,770. Cash dividends of $4,600 will be paid to the stockholders during the year. Nicole also forecasts that first-year sales revenues will be $77,000; wages will be $33,500; the cost of supplies used up will be $16,500; office expenses will be $14,500; and income taxes will be $3,500.

Explanation / Answer

Balance Sheet (Forecasted) As on December 31, 2018 Cash 4050 Accounts Receivable 1970 Building & Equipment 73000 Total Assets 79020 Liabilties Accounts Payable 4850 Notes Payable 39770 Total Liabilities 44620 Stockholder's equity Common Stock 30000 Retained Earnings 4400 Total stockholder's equity 34400 Total Liabilities stockholder's equity 79020 Income statement Sales revenue 77000 Less: Expenses Wages 33500 Cost of supplies 16500 Office expenses 14500 Income tax expense 3500 Total expense 68000 Net Income 9000    Statement of retained earnings Balance beginning 0 Add: Net Income 9000 9000 Less: Dividends 4600 Balance Ending 4400

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