ABC Company - Biographical Information ABC Company is a family owned business which Jonathan started 15 years ago, issuing 900 shares of the 1000 authorized, at a par value of $100 a share. ABC Company is a small manufacturer which produces ladies sports apparel. The business has employed as many as 30 people; however, sales have slipped the last three years, according to Jonathan, due to competition in the marketplace, and the economy. Currently, the business employs nine people, including Jonathan and his son, Junior, who is the Plant Manager. The business appears to be on pace to produce about the same as last year, $800,000, which is down from their high of about $2,500,000 just four years ago. Jonathans family is personally in financial trouble, because Jonathan and Junior arent taking home the same salary they used to. Three years ago, each of them earned $200K per year. At the time of our arrival, Jonathan hadnt taken any pay for a month, and Junior is being paid at the rate of $50K per year. Jonathan has a few health issues, and wants Junior to take over the business, but cant afford to hire a new Plant Manager. Morale throughout the company is low, and productivity is suffering. ABC Company sold 12,307 units last year. 85% of the sales were in workout leggings. Remaining sales were from one order of sweatshirts by their oldest customer. They are behind in payables and past due receivables are at an all time high. Their customer base consists mainly of three local retailers who love working with Jonathan and Junior and have been customers for years. Vendors are getting tired of being paid late, and their primary fabric vendor has just recently put them on COD. There is a loan on the books from Juniors mother-in-law for $30,000, with a pay plan of $750 a month, but the Company has missed the last three payments and Junior and his wife are becoming increasingly upset about the embarrassment and problems this is causing in their family life.

Exercise One - Tab One (portrait page format) Build a standard, Simple Income Statement (P&L). It must show Revenue, Cost of Goods/Direct Costs, and Overhead expenses, along with the standard totals in each section. Include dollar amounts and percentages for each line item. Be careful to choose only P&L appropriate items from the list of "The Numbers" the Client provided. The Numbers Accounting Fees 6,000 Accounts Payable 94.300 Accounts Receivable 92.600 Accum Deor - Building 20.000 Accum Deor - Equipment 16.000 Accum Depr - Vehicles 8.000 Advertising 7500 Additional Paid in Capital 25.000 Bank Fees 4.450 Building 70.000 Capital Stock 90,000 Cash 36.400 Discounts & Allowances - 21,500 Discounts - Materials -8.520 Dues & Subscriptions 620 Equipment 30.000 Equipment Maintenance 18.690 Franchise 6.500 Freight Out Expense 5.200 Goodwill 10.000 Income Tax 800 Interest Expense 4.000 Investment in JKL Corporation 9.000 Land 9.250 Marketable Securities 8.000 Material Purchases 292500 Merchandise Inventory 119.000 Motor Vehicles 20.000 Note Payable (due in 6 months) 7.000 Note Payable (due in 2.5 years) 30,000 Notes Receivable 5,000 Office Supplies 6,000 Payroll - Administrative 44.000 Payroll - Direct Labor 202.210 Payroll - Management 50.000 Payroll - Overtime 13,600 Payroll taxes 15.000 Prepaid Expenses 3,000 Rent 30.000 Repairs & Maintenance 21,250 Retained Earnings 119.750 Revenue 821,500 Revenue Received in Advance 2.000 Sales Commissions 40.000 Selling Supplies 2.250 Exercise Two-Tab Two (landscape page format) Prepare a Six-Week Cash Flow Forecast taking into account the information directly below, the information from the income statement, and the biographical information. This exercise does not have an exact answer, of course. However, there must be positive cash flow each week, and your choices must be reasonable and realistic. You must also show improvements because you are there to improve the business. AR, AP, and other payments due. $ 7,000 Beginning Checking Account Balance Average Weekly Sales for the last 3 months A/R Current $ 6,000 $23,600 $20,000 $12,000 A/R 30 days A/R 60 days A/R 90 days $18,000 A/R over 90 $24,000 Payroll is every other week $11,916 Payroll Taxes (due on 15th of every month) A/P Current A/P 30 days A/P 60 days A/P 90 days A/P over 90 $1,250 $30,000 $33,000 $15,000 $ 6,200 $9,100 $ 550 $ 2,500 $1,350 $ 1,200 $ 650 $ 850 Truck Lease (due on 13th of every month) Payment on Building (due 1st of every month) Equipment Loan (due 22nd of every month) Accountant Fee (due 1st of every month) Telephone average (due 20th of every month) Utilities average (due 4th of every month) Mother-in-Law loan payback (due 5th of every month) $ 750 Exercise One - Tab One (portrait page format) Build a standard, Simple Income Statement (P&L). It must show Revenue, Cost of Goods/Direct Costs, and Overhead expenses, along with the standard totals in each section. Include dollar amounts and percentages for each line item. Be careful to choose only P&L appropriate items from the list of "The Numbers" the Client provided. The Numbers Accounting Fees 6,000 Accounts Payable 94.300 Accounts Receivable 92.600 Accum Deor - Building 20.000 Accum Deor - Equipment 16.000 Accum Depr - Vehicles 8.000 Advertising 7500 Additional Paid in Capital 25.000 Bank Fees 4.450 Building 70.000 Capital Stock 90,000 Cash 36.400 Discounts & Allowances - 21,500 Discounts - Materials -8.520 Dues & Subscriptions 620 Equipment 30.000 Equipment Maintenance 18.690 Franchise 6.500 Freight Out Expense 5.200 Goodwill 10.000 Income Tax 800 Interest Expense 4.000 Investment in JKL Corporation 9.000 Land 9.250 Marketable Securities 8.000 Material Purchases 292500 Merchandise Inventory 119.000 Motor Vehicles 20.000 Note Payable (due in 6 months) 7.000 Note Payable (due in 2.5 years) 30,000 Notes Receivable 5,000 Office Supplies 6,000 Payroll - Administrative 44.000 Payroll - Direct Labor 202.210 Payroll - Management 50.000 Payroll - Overtime 13,600 Payroll taxes 15.000 Prepaid Expenses 3,000 Rent 30.000 Repairs & Maintenance 21,250 Retained Earnings 119.750 Revenue 821,500 Revenue Received in Advance 2.000 Sales Commissions 40.000 Selling Supplies 2.250 Exercise Two-Tab Two (landscape page format) Prepare a Six-Week Cash Flow Forecast taking into account the information directly below, the information from the income statement, and the biographical information. This exercise does not have an exact answer, of course. However, there must be positive cash flow each week, and your choices must be reasonable and realistic. You must also show improvements because you are there to improve the business. AR, AP, and other payments due. $ 7,000 Beginning Checking Account Balance Average Weekly Sales for the last 3 months A/R Current $ 6,000 $23,600 $20,000 $12,000 A/R 30 days A/R 60 days A/R 90 days $18,000 A/R over 90 $24,000 Payroll is every other week $11,916 Payroll Taxes (due on 15th of every month) A/P Current A/P 30 days A/P 60 days A/P 90 days A/P over 90 $1,250 $30,000 $33,000 $15,000 $ 6,200 $9,100 $ 550 $ 2,500 $1,350 $ 1,200 $ 650 $ 850 Truck Lease (due on 13th of every month) Payment on Building (due 1st of every month) Equipment Loan (due 22nd of every month) Accountant Fee (due 1st of every month) Telephone average (due 20th of every month) Utilities average (due 4th of every month) Mother-in-Law loan payback (due 5th of every month) $ 750