Frank is going to pursue additional financing from the local bank. The bank will require some insight into how Frank's business will be successful and sustainable.

Prepare a short write up (approximately 1 page) explaining to the bank why your (Frank's) business will be viable. Submission could include (but are not limited to) location, time of year, target consumer, pricing, anticipated sales volume, and what makes your hot dogs special. The write-up should ask for an amount of cash from the bank that covers the assets you could not buy, as listed in the prompt (and remember there was a $50K equity infusion already), and should give some buffer for some additional cash to keep on hand.

Prepare DRAFT estimated financial statements for the bank to consider.

There is a template provided. See the attachment. The financial statements are going to be basic and will build on your fundamental knowledge from the first three chapters of the book. You will provide

A balance sheet that includes the assets discussed in the announcement only, as well as equity (the amount invested which there are no plans to repay - from the announcement), and the liabilities (amounts expected to be repaid in cash to the bank). While we're not that far into debt/equity, the primary difference is whether the Company is expected to repay in cash.

You can use the discussion as finalized in the announcement for the assets, liabilities, and equity you will expect to see on the balance sheet. The write up to the bank should be professional and request an amount of money which is sensible based upon the needs of the business, with some cash buffer to have cash on hand. Please see earlier discussions and announcements.

Frank contributed $50,000 to the business.

I can tell almost everyone knows this, but to eliminate any confusion, the entry for the business is Dr. Cash $50,000, Cr. Equity $50,000. Any remaining cash after he receives the loan and uses money will be Cash in the financial information (asset). The cash infusion will be Equity in the financial information (equity). This is NOT the loan he will receive. This is his own initial money.

He will need:

- A hotdog food truck. For our purposes, this cart drives, cooks, has refrigeration, has signage, has menus, has a handwashing station, and appropriate bells and whistles. He can get a decent, used food truck for $50,000. This will start as an asset of the business. It is expected to last for 5 years with no salvage value. This will be referred to as Property, Plant & Equipment in the financial information (asset).

- hotdogs and other things to sell. For our purposes, hes always going to sell the same combo and its going to include a hotdog with a bun, chips and a drink. We will refer to this as a unit. And he always wants 500 units of inventory on hand at all times. (I realize this is simplified but were trying to get the basics). For our purposes this includes related supplies/utensils/condiments. This will be referred to as Inventory in the financial information (asset).

- Licensing, permits, food certifications. These will cost $4,800. He will have to pay these in advance. And they will last for one year. He will have to re-up these annually. This will be referred to Licensing in the financial information (asset).

- He will need to hire lawyers to get trademarks. These will cost $10,000 and have an indefinite life. This will be referred to as Trademarks in the financial information (asset).

- He will need lawyers and accountants. These will be monthly expenses. He anticipates $600 per month (in my experience that is about right for a startup). These will flow through the income statement and will not be part of part 1 of the project, but will apply to part 2.

- He will need insurance. This will cost $4,800. He will have to pay these in advance. And they will last for one year. He will have to re-up these annually. This will be referred to Prepaid Insurance in the financial information (asset).

- He obviously needs more money to get this up and running, and needs some extra cash on hand just in case. When applying for the loan, the loan will be collateralized by the truck and his house, which is paid off. He should be able to borrow at 8%. You will need to determine the amount youre applying for in the write up to the bank, and talk about the business strategy. This will be a debit to cash and a credit to debt. The debt he takes out will be reflected as Debt in the financial information (liability). He will not have to pay back any principal for the first 5 years. It will be all interest. The interest expense will flow through the income statement and will not be part of part 1 of the project, but will apply to part 2.

Frank's Back to Main INCOME STATEMENTS Three Months Ended December 31, Six Months Ended December 31, 2018 2018 Revenue Operating expenses: Cost of revenue Sales and marketing General and administrative Total operating expenses Net income Note: Not used in part 1 of the project Frank's BALANCE SHEETS Day 1 of business Assets Current assets: Cash Prepaid Insurance and Licensing Inventory Total current assets Non-current assets: Property, Plant & Equipment Trademarks Total non-current assets: -00. Total assets -00. Liabilities and Stockholders' Equity Debt Owners Equity Total liabilities and stockholders' equity -00. Frank's Back to Main INCOME STATEMENTS Three Months Ended December 31, Six Months Ended December 31, 2018 2018 Revenue Operating expenses: Cost of revenue Sales and marketing General and administrative Total operating expenses Net income Note: Not used in part 1 of the project Frank's BALANCE SHEETS Day 1 of business Assets Current assets: Cash Prepaid Insurance and Licensing Inventory Total current assets Non-current assets: Property, Plant & Equipment Trademarks Total non-current assets: -00. Total assets -00. Liabilities and Stockholders' Equity Debt Owners Equity Total liabilities and stockholders' equity -00