Financial Statement Project: Montana Furniture Design part 2 Questions 4,5,6

Use the attached financial statements to answer the following questions. Please be sure to read and adhere to the additional guidance listed on the following page. 19 20 This 4. The owner of Montana Furniture Design would like to expand to several other states. To do this, she hopes to get outside tunding. She wants to show her 2021 financials to a potential lender. Will this impact advice you may give her about buying a significant amount of inventory at year end 20213 Why or why not? 5. You'll notice that account receivable at year end 2020 are significantly larger than they've been in the past. While assessing the financials, the lender will no doubt note this and inquire further. What are three relevant and helpful questions the lender could ask in order to determine the risk around collecting all of those receivables? (Assume each of your questions would be answered by the owner with support documentation to verify the response) 6. Montana Furniture Design is presented using Generally Accepted Accounting Principles. This requires that the financials be presented using the accrual method of accounting. If we changed the 2020 method of accounting from the accrual method to the cash method, what would the 2020 net income be? Montana Furniture Design Profit and Loss January 2018 - December 2020 JAN - DEC 2018 $2,276,200.04 Income JAN - DEC 2019 $2,018,919.33 JAN - DEC 2020 $2,544,841.58 Cost of Goods Sold Cost of Goods Sold Labor & wages Materials Other costs Shipping Wholesale items Total Cost of Goods Sold GROSS PROFIT 535,388.59 358,432.78 17,572.46 120,887.28 369,990.57 $1,402,271.64 $873,928.40 487,623.68 380,220.98 24,162.06 116,725.88 305,975.62 $1,314,708.22 $704,211.11 537,451.37 512,163.80 17,390.32 137,198.74 384,227.35 $1,568,431.58 $978,410.00 Expenses Charitable contributions Fees & subscriptions Marketing Meals and Entertainment Office expenses & Utilities Payroll expenses - administration Property taxes Reference materials Repair & Maintenance Salaries & wages Supplies & small tools Telephone & Internet 27,181.75 13,944.88 14,803.36 1,301.94 8,188.70 5,491.70 2.353.90 40,520.25 12,856.21 28,961,30 700.52 22,029.10 42,285.00 16,440.78 30,472.93 1,926.62 19,368.75 1,027.64 2.479.04 49.95 17,400.04 250,031.63 5,719.65 5,902.69 9,733.46 225,935.42 5,568.83 5,077.83 2,408.13 17.25 19,141.09 228,873.71 4,634.71 3,782 59 27,181.75 13,944.88 14,803.36 1,301.04 8,188.70 5,401.70 2,353.90 40,520.25 12,856.21 28,961.90 700.52 22,029.10 Expenses Charitable contributions Fees & subscriptions Marketing Meals and Entertainment Office expenses & utilities Payroll expenses administration Property taxes Reference materials Repair & Maintenance Salaries & wages Supplies & small tools Telephone & internet Travel Total Expenses NET OPERATING INCOME Other Income Other Expenses NET OTHER INCOME 9,733.46 225,835.42 5,568.83 5,077.83 8,657.06 $328,236.83 $545,691.57 $56.08 $0.00 $56.08 $545,747.65 2,408.13 17.25 19,141.09 228,873.71 4,634.71 3,782 59 11,214.06 $374,838.82 $329,272.19 $52.15 $0.00 $52.15 $329,324.34 42 286.00 16,440.78 30.472.83 1,928.82 19,368.75 1,027.BA 2,479.04 49.95 17,400.04 250,031.63 5,719.65 5,902.69 12,855.67 $406,960.39 $570,449.81 $171.00 $58.48 $112.52 $570,582.13 NET INCOME Montana Furniture Design Balance Sheet 2018 through 2020 JAN - DEC 2018 JAN. DEC 2019 JAN - DEC 2020 29,210.44 5.00 6,066.58 $35,282.02 75,266.59 5.27 0.00 $75.271.86 60.118.13 72,271.10 0.00 $132,389.23 39,695.00 $39,895.00 $17.681.69 $92,658.71 37,890.29 $37,890.29 $0.00 $113,162.15 212,066.58 $212,066.58 $24,478.40 $388,832.21 ASSETS Current Assets Bank Accounts Checking Savings Petty Cash Total Bank Accounts Accounts Receivable Accounts Receivable Total Accounts Receivable Other Current Assets Total Current Assets Fixed Assets Accumulated depreciation Equipment Improvements Roof Building addition Total Fbxed Assets Inventory TOTAL ASSETS LIABILITIES AND EQUITY Liabilities Current Liabilities 227,052.00 256,308.00 30.870.00 27.450.13 $87,576.13 $612,601.00 $792,835.84 239,224.00 262,447.00 5,300.40 30.870.00 27.450.13 $86,843.53 $588,791.00 $788,796.68 243,369.00 262,447.00 5,300.40 30,870.00 27,450.13 $82,698.53 $294,153.00 $745,783.74 Improvements Roof Building addition Total Fbced Assets 30,870.00 27,450.13 $87,578.13 $612,601.00 $792,835.84 5,300.40 30,870.00 27,450.13 $86,849.69 $588,791.00 $788,796.68 5,300.40 30,870.00 27.450.13 $82,898.53 $294, 163.00 $745,783.74 Inventory TOTAL ASSETS LIABILITIES AND EQUITY Liabilities Current Liabilities Accounts Payable Accounts Payable Total Accounts Payable Credit Cards Line of Credit Total Current Llabilities Long-Term Liabilities Total Liabilities Equity TOTAL LIABILITIES AND EQUITY 0.00 $0.00 $ -6,021.46 $60,000.00 $53,978.54 $0.00 $53,978.54 $738,857.30 $792,835.84 35,772.72 $36.772.72 $7,819.82 $0.00 $43,592.54 $0.00 $43,592.54 $745,204.14 $788,796.68 0.00 $0.00 $27,723.07 $0.00 $27.723.07 $112,170.40 $139,893.47 $605,890.27 $746,783.74