Financials: Garden Solutions Inc. A landscaping and garden maintenance company Garden Solutions Inc. is being planned to open April 1, 2021 in Victoria BC. It will be a limited company owned by two brothers. The two brothers are the only shareholders. Both brothers and their employees are all trained and experienced in landscaping and garden maintenance. The company plans to focus both on homeowners and municipal governments for its two primary target markets. The company will make recommendations regarding needed pruning or removal of trees, shrubs and other plants and their required ongoing care. The company will also plant, repair and maintain lawns, The municipal governments have their own employees for maintenance of gardens, but hire companies to complete major projects, such as replanting areas left after homeless people are housed indoors and their "tent camps" are removed from parks. Garden Solutions Inc. will offer a money-back guarantee of all work if the customer is not satisfied. The company charges $100 per hour for its services. It is priced slightly above the competitors in the area, but the shareholders feel their services are higher quality and the competitors do not offer a money back guarantee The following start-up costs will be incurred in the month prior to opening: equipment (will be used for 5 years) $5000, supplies (will last one year) $3000, business license (for one year) $200, business insurance (for one year) $3000, and 2 vehicles (will be used for 5 years) $30,000 each. The Cashflow Budget & Income Statement are below. For each month starting the month the business opens, the expenses are estimated to be: each vehicle (includes fuel, maintenance and repairs) $500, each vehicles insurance $150, wages for each owner $500 wages for all employees combined $8000, home office expenses $400, phones $300, marketing 5400, and miscellaneous $200 The owners have savings to cover all start-up expenses and will borrow $10,000 from a family member to put in the business as a "cushion" for anything unexpected. They plan to repay the $10,000 in one payment in April of year 2. Sales for year one are expected to be constant throughout the year at $25,000 per month You need to develop Balance Sheets (you are NOT required to submit them, but will need them to answer one of the following questions, a balance sheet template is provided.) a. (10 marks) What is the profit on sales ratio for year 1? And, provide your opinion as to whether this is a good situation or not. Explain why. b. (5 maiks) What is the expense ratio for total wages (owners/shareholders and employees) for year 12 (20 marks) What is the total Assets at the end of year 1? What is the total Liabilities at the end of year 1? Is this business in a healthy financial situation? Explain why or why not. d. (5 marks) Will Garden Solutions inc. need to collect and remit GST? Explain why or why not. Garden Solutions in Cashflow Budget April 1, 2021 - March 31, 2022 0 10000 14400 1000 2200 27600 12000 16400 40000 45000 4900 54000 5400 Beg cash Cash for owner 71200 Sloan 10000 les Total Cash In Cash Disbursements equipment Supples 01200 25000 25000 25000 25000 25000 25000 25000 25000 25000 25000 25000 25000 31200 25000 25000 25000 25000 25000 25000 25000 25000 25000 25000 25000 25000 5000 3000 Garden Solutions Inc Cashflow Budget April 1, 2021 - March 31, 2022 Beg cash o 10000 14400 18800 23200 27500 32000 35400 40000 45200 49000 54000 53400 Cash In: owners 71200 & loan 10000 81200 tales 25000 25000 25000 25000 25000 25000 25000 25000 25000 25000 25000 25000 Total Cash In B1200 25000 25000 25000 25000 25000 25000 25000 25000 25000 25000 25000 25000 Cash Disbursements: equipment 5000 supplies 3000 business license 200 business insurance 3000 vehicles startup 60000 vehicles expenses 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 vehicle Insurance 300 300 300 300 300 300 300 300 300 300 300 300 wag-shareholders 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 was employees B00D 8000 8000 8000 8000 8000 8000 8000 3000 3000 3000 3000 home office 400 400 400 400 400 400 400 400 400 400 400 phones 300 300 300 300 300 300 300 300 300 300 300 300 400 400 marketing 400 400 400 400 400 400 400 400 400 400 misc 200 200 200 200 200 200 200 200 200 200 200 200 Total Cash Disbursements 21200 20500 20600 20600 20600 20600 20600 20600 20000 20000 20000 20600 20600 Ending Cash Balance 10000 14400 18800 23200 27600 32000 36400 40000 45200 49500 54000 58400 62000 Garden Solutions Inc Income Statement 400 Financials: Garden Solutions Inc. A landscaping and garden maintenance company Garden Solutions Inc. is being planned to open April 1, 2021 in Victoria BC. It will be a limited company owned by two brothers. The two brothers are the only shareholders. Both brothers and their employees are all trained and experienced in landscaping and garden maintenance. The company plans to focus both on homeowners and municipal governments for its two primary target markets. The company will make recommendations regarding needed pruning or removal of trees, shrubs and other plants and their required ongoing care. The company will also plant, repair and maintain lawns, The municipal governments have their own employees for maintenance of gardens, but hire companies to complete major projects, such as replanting areas left after homeless people are housed indoors and their "tent camps" are removed from parks. Garden Solutions Inc. will offer a money-back guarantee of all work if the customer is not satisfied. The company charges $100 per hour for its services. It is priced slightly above the competitors in the area, but the shareholders feel their services are higher quality and the competitors do not offer a money back guarantee The following start-up costs will be incurred in the month prior to opening: equipment (will be used for 5 years) $5000, supplies (will last one year) $3000, business license (for one year) $200, business insurance (for one year) $3000, and 2 vehicles (will be used for 5 years) $30,000 each. The Cashflow Budget & Income Statement are below. For each month starting the month the business opens, the expenses are estimated to be: each vehicle (includes fuel, maintenance and repairs) $500, each vehicles insurance $150, wages for each owner $500 wages for all employees combined $8000, home office expenses $400, phones $300, marketing 5400, and miscellaneous $200 The owners have savings to cover all start-up expenses and will borrow $10,000 from a family member to put in the business as a "cushion" for anything unexpected. They plan to repay the $10,000 in one payment in April of year 2. Sales for year one are expected to be constant throughout the year at $25,000 per month You need to develop Balance Sheets (you are NOT required to submit them, but will need them to answer one of the following questions, a balance sheet template is provided.) a. (10 marks) What is the profit on sales ratio for year 1? And, provide your opinion as to whether this is a good situation or not. Explain why. b. (5 maiks) What is the expense ratio for total wages (owners/shareholders and employees) for year 12 (20 marks) What is the total Assets at the end of year 1? What is the total Liabilities at the end of year 1? Is this business in a healthy financial situation? Explain why or why not. d. (5 marks) Will Garden Solutions inc. need to collect and remit GST? Explain why or why not. Garden Solutions in Cashflow Budget April 1, 2021 - March 31, 2022 0 10000 14400 1000 2200 27600 12000 16400 40000 45000 4900 54000 5400 Beg cash Cash for owner 71200 Sloan 10000 les Total Cash In Cash Disbursements equipment Supples 01200 25000 25000 25000 25000 25000 25000 25000 25000 25000 25000 25000 25000 31200 25000 25000 25000 25000 25000 25000 25000 25000 25000 25000 25000 25000 5000 3000 Garden Solutions Inc Cashflow Budget April 1, 2021 - March 31, 2022 Beg cash o 10000 14400 18800 23200 27500 32000 35400 40000 45200 49000 54000 53400 Cash In: owners 71200 & loan 10000 81200 tales 25000 25000 25000 25000 25000 25000 25000 25000 25000 25000 25000 25000 Total Cash In B1200 25000 25000 25000 25000 25000 25000 25000 25000 25000 25000 25000 25000 Cash Disbursements: equipment 5000 supplies 3000 business license 200 business insurance 3000 vehicles startup 60000 vehicles expenses 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 vehicle Insurance 300 300 300 300 300 300 300 300 300 300 300 300 wag-shareholders 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 was employees B00D 8000 8000 8000 8000 8000 8000 8000 3000 3000 3000 3000 home office 400 400 400 400 400 400 400 400 400 400 400 phones 300 300 300 300 300 300 300 300 300 300 300 300 400 400 marketing 400 400 400 400 400 400 400 400 400 400 misc 200 200 200 200 200 200 200 200 200 200 200 200 Total Cash Disbursements 21200 20500 20600 20600 20600 20600 20600 20600 20000 20000 20000 20600 20600 Ending Cash Balance 10000 14400 18800 23200 27600 32000 36400 40000 45200 49500 54000 58400 62000 Garden Solutions Inc Income Statement 400