D80 fx missing A B C E F 1 Point Value 2 3 4 5 6 Period 0 - You will have to build your opening Balance Sheet for period 0. Which shall include: Initial Investment in the company. How many shares will you issue? Assume Par value of $0.50FM/share. What is your common stock account and what is your additional paid in capital amount? What is the share and % ownership between the owners? Record your Cash Amount Make sure that your B/S Balances 7 8 9 Issued Shares: 15,000 10 11 5 Period 0 12 Initial Investment 20000 13 14 15 16 Assets Current Assets Cash Liabilities and Equity Liabilities 0 $ 20,000.00 17 222222222222 Common Stock $ 7,500.00 Total Assets $ 20,000.00 Additional Paid in Capital Total Equity $ 12,500.00 20,000 Period 1 You obtain a loan (per the assumption spread sheet in the folder) to buy equipment. The loan is payable in 20 periods (in equal instalments). You don't have to pay interest until period 2. No payment principal payment in Period 1. Payments start in Period 2 Don't worry about equipment depreciation. Buy your inventory and Produce your product. Determine your product cost. Make sure to record the adequate accounts in the B/S and that the statement balances. Determine what will be your salaries, which will become part of Fixed Costs. Financial Statements VOS Team Assumptions Tax Rates + Calculation Mode: Automatic Workbook Statistics A B 24 25 26 27 28 29 C D E F You obtain a loan (per the assumption spread sheet in the folder) to buy equipment. The loan is payable in 20 periods (in equal instalments). You don't have to pay interest until period 2. No payment principal payment in Period 1. Payments start in Period 2 Don't worry about equipment depreciation. Buy your inventory and Produce your product. Determine your product cost. Make sure to record the adequate accounts in the B/S and that the statement balances. Determine what will be your salaries, which will become part of Fixed Costs. 30 31 15 Period 1 32 33 34 35 36 Assets Liabilities and Equity 37 38 39 Current Assets Cash Inventory Liabilities $ 20,000.00 Debt $ 55,000.00 0 Total Liabilities $ 55,000.00 40 Total Current Assets es $ 20,000.00 41 Equity 42 Long Term Assets Common Stock $ 7,500.00 43 Equipment $ 60,000.00 Additional Paid in Capital $ 12,500.00 44 Total Equity $ 25,000.00 45 Total Assets $ 80,000.00 Total Liabilities and Equity $ 80,000.00 46 47 48 49 50 51 Product Cost per Unit Salaries $ 20,000.00 2500 52 53 > =Financial Statements VOS Team Assumptions Tax Rates + 54 A B Start Operations E F G 55 56 Period 2 57 58 59 60 61 62 63 64 65 66 67 Sale of your products: You will each get a different amount of Funny Money (from the bank - aka me) to purchase products Set a Sales Price per Unit and Cost per Unit Sell Your Product in Class. Make sure to keep Sales Records to determine your revenue (You will need to turn these in). Determine your COGS based on your Cost per Unit and Units sold. Determine your Gross Income Determine your fixed costs (Your salaries) Determine your interest Expense Assume you pay taxes as a Corporation Create your Income Statement and Determine Net Income. For Period 2 Calculate the amount of Debt that you need to amortize during this period What is the effect on your different accounts on your Balance Sheet? Create your B/S for Period 2. 68 69 70 71 72 Sales Price Per Unit 73 Cost Per Unit 5000 2500 74 75 76 77 Number of Units Sold 78 Price per Unit 79 Cost Per Unit 80 Interest Expense 5000 2500 missing 81 82 < Financial Statements VOS Team Assumptions Tax Rates + 84 A 15 B C Income Statement Revenue D E F 85 es 86 COGS 87 Gross Margin 88 EBIT 89 Intrerest 90 EBT 91 Taxes 92 Net Income $ $ 9998.89% 45,104.99 8% $ 45,104.91 21% $ 45,104.70 45,000.00 5.00 93 94 95 15 Think of What Accounts are affected on My Balance Sheet? And how...... 96 97 98 Assets 99 Current Assets 100 Cash 101 Inventory 102 103 104 105 Total Current Assets Long Term Assets Equipment 106 107 108 Total Assets Liabilities and Equity Liabilities $ 45,000.00 Debt 20000 0 Total Liabilities 20000 $45,000.00 Share holders Equity Common Stock $ 7,500.00 60,000 Additional Paid in Capital $ 12,500.00 Retaied Earnings $ 45,104.70 Total Equity $ 20,000.00 105,000.00 Total Liabilities and Equity $ 85,104.70 109 110 111 15 112 Ratio Analysis for Period 2 Balance Sheet Common Sized Statements > = Financial Statements VOS Team Assumptions Tax Rates + 111 A 15 112 113 114 115 116 117 118 119 120 121 122 123 124 B U Ratio Analysis for Period 2 Balance Sheet Current Assets Cash Inventory Total Current Assets Long Term Assets Equipment Total Assets Liabilities Debt Total Liabilities D 45000 0 45000 60000 $ 105,000.00 20000 20,000 Share holders Equity 125 Common Stock 7500 126 Additional Paid in Capital $ 12,500.00 127 Retaied Earnings S 45,104.70 128 Total Equity S 20,000.00 129 Total Liabilities and Equity S 85,104.70 130 131 132 Income Statement 133 134 Revenue COGS 45000 5000 135 Gross Margin 9998.89% 136 Fixed Costs 0 137 EBIT S 45,104.99 138 Intrerest S 45,005.00 139 EBT S 45,104.91 < III = Financial Statements VOS Team Assumptions Tax Rates + E Common Sized Statements 132 133 134 135 A B C Income Statement Revenue COGS 45000 5000 E LL F Gross Margin 9998.89% 137 138 136 EBIT Intrerest Fixed Costs 0 S 45,104.99 S 45,005.00 139 140 EBT Taxes $ 45,104.91 0.21 141 Net Income $ 45,104.70 142 143 144 5 145 146 147 What do you notice from your ratio = and common sized statement calculations? If you analyze it using the VOS indicator, how attractive is your venture? 148 149 150 151 152 153 154 155 156 157 158 159 160 < ^ 10 10 Calculate the dollar amount and the number of units to break even. Should you consider interest as a Fixed Cost? Why yes or why not? = Financial Statements VOS Team Assumptions Tax Rates + 153 A 154 155 156 157 158 159 10 B D E F Calculate the dollar amount and the number of units to break even. Should you consider interest as a Fixed Cost? Why yes or why not? G 160 161 Contribution Margin $ 45,104.70 162 Fixed Costs 0 163 Survivial Revenue or Survivial Sales = -> Round up to the next number 164 Pricer per Unit 5 165 No of Units to break even = 9 166 167 168 169 10 170 Assume that you pay taxes as an LLC and you do not have any other sources of income. What would be your tax payment, marginal tax rate? How much would you save or overpay if you paid taxes as an LLC? 171 172 173 174 Tax Payment Marginal Tax Rate $ 9,020.94 175 % Difference in Tax Payment 176 177 10 Reflection 178 What did you learn? 179 180 181 182 < > = Financial Statements VOS Team Assumptions Tax Rates +