Accounting 620

Entrepreneurial Accounting

Spring 2020

Homework 5

Working in a group of your choosing and using the new venture you were given for the forecasting exercise (or one of your choosing), please prepare the following:

1) A projected monthly income statement for Year 1. Your income statement must include:

• Revenues
• At least 7 expenses some fixed, some variable, some on-going, some one-time or infrequent (annual license, for example)
• There should be some type of growth

2) A projected monthly cash budget for Year 1. Your cash budget must include:

• At least one lagged expense payment (expense in one month, payment in the next) OR prepayment (like insurance in our ABC example)
• Collection of revenues can be lagged (have Accounts Receivable) or all collected currently (no billings)
• Start-up financing how much, what source and what do you spend it on
• Determine if you need additional cash source? How much? Timing?
• The acquisition of Property, Plant and Equipment lease or buy? Depreciation?

3) Balance sheet (hint: keep it simple)

4) Page/sheet of assumptions and your story