Case study: Janet Rowe Janet Rowe graduated from high school five years ago with a background in agronomy. laner had worked for a lawn care service until a year ago, when she decided to start her own business selling soil testing kits to homeowners. Janet had saved $20,000 during the pust five years. She decided to invest the $20,000 in a proprietorship to sell the soil testing no make ends meet before she received the first check. Janet also spent $20,000 to pur- lanet spent $2,000 for gas and other supplies. Janet calculated she needed at least $3,000 chese kits that will be placed in inventory. Janet's sister agreed to keep the books. Janet's bither let her use the family garage for an office and agreed not to charge rent the first Janet purchased the following capital items to start the business. First, she purchased a service truck that cost $45,000, which she estimates will last for another five years. Second, she purchased her own storage tank for gasoline to be used for the truck, and that cost another $1,000. Third, she purchased a computer and some other office equip- Janet's father was willing to lend her $15,000. The principal is to be repaid in 18 months. The interest rate is 4 percent per year. At the end of 12 months Janet will repay 12/31/2014. How much did she have to borrow from the bank? Prepare an income statement for Janet's first year of business, 1/1/2015-12/31/2015. kits in her local community. nito sev- borrow to buy the new led, given his new profit forecast? Why or why not? equipments en care y excess ees gross margin Are gen- helping Herstand ets. es. Such future of all of core of year. ment for a total of $4,000. anager? inancial ce sheet impor- inction rtant to her father the interest for 12 months, but no principal. At the end of 18 months Janet will puy her father interest for 6 months, plus all principal owed on the loan. Janet borrowed he balance of what she needed from First National Bank. The loan was to be repaid in five equal, annual principal payments, with interest at an annual rate of 5 percent. At the end of the first year Janet expenses were as follows: gas, oil, repairs and tires $10,000 and telephone $600. During her first year she purchased 1,000 kits at $50.00/kit that were in addition to the $20,000 spent on kits to start the business. The freight on the kits was $5,000. At the end of the first year of the business she had $20,000 in inventory Her gross revenue from the business was $100,000. Kits sold that had been returned for a refund had been sold for $100.00. She had been making $50,000 per year when working at her previous job, and she calculated that she should make at least that much to justify the time spent in the business. Her sister spent about one day per week doing the office work, and Janet felt that she should be reimbursed at a rate of $50 per day for her efforts. Her sister worked 50 weeks and went on vacation for two weeks. balance y for a oint of Hinter- Questions ased by Why are perfor- Prepare a balance sheet as of the first day of business for Janet. The balance sheet is to be prepared after she purchased the assets needed to start the business and bor- Towed the money from her father and the bank. The date for the balance sheet is w sub- tead of erate a If none 2. Make the following assumptions