Calculate the projected income statement and balance sheet

EXHIBIT 3: NORTHWEST STATEMENT OF FINANCIAL POSITION (AS AT AUGUST 31, IN CA$) Assets Current assets Cash Accounts receivable Ofce supplies Prepaid rent Total current assets Long-lived assets Ofce equipment 2,500 625 Fitness equipment 42,000 Less: accum. depreciation 5,250 Certications 3 ,700 1 ,850 Less: accum. depreciation Less: accum. amortization Total longlived assets Total assets Liabilities and Shareholders' equity Current liabilities Accounts payable\" Interest payable Income tax payable Current portionbank loan Total current liabilities Long-term liabilities Bank loan Shareholders' equity Common stock Retained earnings Total shareholders' equity Total liabilities and shareholders' equity 2016 45 646 225 2,250 3,166 1 ,875 36,750 1 ,850 40,475 43,641 208 10,000 10,208 40,000 25,000 (31,567) (6,567) 43,641 2017 5,500 2,000 47,000 11,125 3,700 (925) 1,237 250 2,250 2,862 3,500 35,875 3,700 43,075 45,937 294 96 1,817 10,000 12,207 30,000 25,000 (21,270) 3,730 45,937 2018 5,500 3,375 69,000 19,750 3,700 1 ,850 44,074 2,133 375 2,250 48,832 2,125 49,250 1,850 53,225 102,057 396 10,190 10,000 20,586 20,000 25,000 36,471 61,471 102,057 Note: *Accounts payable charges solely related to intemet and phone and utilities charges; accum. = accumulated. Source: Company les. EXHIBIT 2: NORTHWEST STATEMENT OF EARNINGS (YEARS ENDING AUGUST 31, IN CA$) 2016 2017 Revenue (%) 2018 82,500 (%) Cost of sales 100.0 137,500 100.0 (%) 2,393 220,000 2.9 100.0 Gross profit 3,988 80, 107 2.9 97.1 6,380 133,512 2.9 97.1 213,620 97.1 Operating expenses Advertising Amortization 15,578 18.9 19,473 1,850 14.2 2.2 27,262 1,850 12.4 Depreciation 5,875 1.3 7.1 1,850 0.8 Insurance 7,250 565 0.7 5.3 10,000 4.5 Internet and phone 600 2,280 0.4 2.8 650 2,508 0.3 Licensing fees 800 1.8 2,759 1.3 Miscellaneous 1.0 800 328 0.6 800 0.4 0.4 Office supplies 435 729 0.3 480 Online scheduler 0.9 940 318 0.7 0.2 0.4 1,032 0.5 Rent 312 0.2 314 0. 1 Salary 27,000 32.7 48,000 27,000 19.6 58.2 52,000 27,000 12.3 Travel Utilities 2, 144 37.8 65,000 2.6 29.5 2,016 2,573 2.4 2,218 1.9 3,602 1.6 1.6 Website hosting or domain 331 0.4 2,439 1.1 Total operating expenses 107,814 334 0.2 130.7 341 118,293 0.2 86.1 143,529 65.2 Net income before interest and tax (27,707) Interest expense -33.6 15,219 3,860 4.7 11.1 70,091 31.9 Net income before tax (31,567) 3, 105 2.3 -38.3 2, 160 1.0 Income tax expense 12, 1 14 8.8 67,931 30.9 Net income 0.0 (31,567) 1,817 1.3 -38.3 10, 190 10,297 4.6 7.5 57,741 26.2 Source: Company files.FUTURE OUTLOOK If he were to move forward with the expansion, Bryan was condent that he would see revenue growth of 25 per cent for scal 2019. To achieve this growth, however, he needed to increase marketing expenditures by $15,000 and move to a larger facility. The building where Northwest was currently located had a vacancy in a larger unit that was available for immediate occupancy for $3,500 per month. The landlord charged Bryan rent only on the new unit and had agreed to let Bryan continue using his existing unit until he was ready to run the studio out of the new one. Bryan would immediately need to increase his prepayment of last month's rent and September 2018's rent. He was condent that with some help from his family and friends he could have the new unit up and running before the end of September. All preparations for the move would take place outside of normal business hours, allowing regularly scheduled classes and personal training sessions to take place in the existing unit without interruption. The new unit would come with increased utility and insurance costs, making each $250 and $150 per month, respectively. Bryan had a small group of clients who always paid on credit, and he offered credit terms of net 30. These clients had been devoted customers of Northwest from the beginning, and they preferred to pay for their monthly personal training sessions and tness classes in one lump sum rather than before each session or class. These clients had consistently represented 10 per cent of all of Northwest's revenue since inception, and Bryan did not expect that this percentage of total projected revenue would change in scal 2019. He would need to hire an additional personal trainer to facilitate the added personal training sessions and tness classes. Bryan estimated that the new personal trainer would be required to work an average of 12 hours per week throughout the year and be paid $25 per hour. He planned to increase his own annual salary to $80,000. Bryan would need to purchase new tness equipment to accommodate the additional services. The new equipment would cost $65,000 and would be depreciated using the straight line method over a useful life of six years with no residual value. The existing tness equipment had a useful life of eight years and the office equipment had a useful life of four years. Both were depreciated using the straight line method with no residual value. He would need to renew his industry certications every two years on August 31 at a cost of $3,700. The bank loan was repaid in equal monthly installments with the principal and interest payments due on the last day of each month. Total interest expenses for the bank loan were projected to be $1,310 for scal 2019, and the following expenses would remain unchanged from scal 2018: internet and phone, licensing fees, online scheduler, travel, and website hosting or domain. All other operating expenses were projected to remain the same percentage of sales as in scal 2018