Read the following case study.
For One Stop Variety, use the forms provided to prepare the following:
- Cash Flow Statement
- Income (Loss) Projection
CASE STUDY: ONE STOP VARIETY
Jane Ward has worked for the last 10 years as a bookkeeper for a small manufacturer. Due to a downsizing in the company, she has found herself without a job. Recent attempts to find employment have been unsuccessful. Jane has decided to start a new business, One Stop Variety. Before she can approach a bank for the required financing, financial projections must be prepared.
Jane has made the following assumptions:
1. Monthly sales will remain constant at $30,000. per month. 90% of sales are paid in cash when the sale is made, 10% are paid in 30 days.
2. Cost of goods sold has been estimated at 80% (based on current industry average). Purchases are paid for when goods are received.
3. Inventory levels will remain fairly constant at $15,000.
4. Depreciation on assets has been estimated at $150. per month.
5. The following expenses are paid during the month incurred:
|Rent||$1,000 / month|
|Wages and Benefits||$1,500 / month|
|Drawings||$2,000 / month|
|Vehicle Expenses||$100 / month|
|Inventory Purchases||$24,000 / month|
6. The following expenses are not paid during the month incurred, but are paid in 30 days:
|Advertising||$200 / month|
|Utilities||$300 / month|
|Office Expenses||$100 / month|
7. Start-Up costs, which will be paid in full before business opening, estimated as follows:
|Rent Deposit|| 1,000
8. Jane has $10,000 in cash to invest in the business.
9. It is not known at this time how much financing is required.