INCOME STATEMENT FOR BOBBIE IN STYLE
420 units sold
Revenue 2023
Sales (420 units @ $ 80 per unit)	$33,600.00
COGS ($30 per unit)	$12,600.00
Gross Profit	$21,000.00
Operating Expenses
Advertising fees	$2,000
Bank Fees	$150
Phone Internet	$1,200
Office Supplies	$800
Shipping ($3 per unit)	$1,260
Utilities	$900
Office Supplies	$800
Total Operating Expenses	7,110
EBITDA	$13,890.00
Depreciation expense (straight line)	$800
EBIT or Pretax Income	$13,090.00
Interest expense on note payable	$350
Earnings before Tax	$12,740.00
Tax	3,312
NET INCOME (Before sale of Fixed Assets	9,428
Gain on sale of asset
Taxes on gain
Net Income (after Sale of Fixed Asset)	11,130
Memo Total Taxes	3910	Tax Rate 26%

	Bobble in Style
	Cash Flow Sheet
	As of January 2023
Operating Activities:
Net Income: $33,600 (Sales) - $12,600 (Cost of goods sold) - $2,000 (Advertising fees) - $150 (Bank fees) - $1,200 (Phone/internet) - $1,260 (Shipping) - $900 (Utilities) - $800 (Office supplies) - $350 (Interest expense) - $500 (Depreciation) = $15,100
Modifications to align net income with net cash generated from operational activities:
Depreciation Expense: $500
Increase in Accounts Receivable: -$50
Increase in Raw Materials Inventory: -$10,500
Decrease in Accounts Payable: $0
Income Tax Expense: $33600 (Net Income) * 26% = -$8736
Net Cash Provided by Operating Activities
$15,100 + $500 - $50 -$10,500 - $8,736 = $3,686
Investing Activities:
Proceeds from Sale of Equipment: $3,000
Purchase of Equipment: -$1,600
Net Cash Provided by Investing Activities:
$3,000$1,600=$1,400
Financing Activities:
Repayment of Note Payable: -$5,000
Net Cash Used in Financing Activities:
($5,000)
Cash and Cash Equivalents: Net Increase (Decrease):
($3,686)+$1,400$5,000=$7,286
At the end of the year, cash and cash equivalent:
$10,000
Credits and Cash Equivalents at Year's Stars:
$10,000 (Beginning) - $7,286 (Net Decrease) = $2,714
So, the cash and cash equivalents at the end of 2023 amount to $2,714.

Bobble In Style Balance Sheet As of January 1, 2023
Assets	2022
Cash and Equivalents	10,000.00
Account Receivables	-
Raw materials inventory	10,500.00
Total Current Assets	20,500.00
Equipment	5,000.00
Accumulated depreciation	1,000.00
Net Fixed Assets	4,000.00
Total Assets	24,500.00
Liabilities and Owner's Equity
Accounts payable	-
Note payable	5,000.00
Total Current Liabilities	5,000.00
Long-Term Debt	-
Total Liabilities	5,000.00
Common stock	15,000.00
Retained Earnings	4,500.00
Total Shareholder's Equity	19,500.00
Total Liabilities and Owner's Equity

1. Financial Ratios: Calculate the following financial ratios and explain the meaning of the results.

Net Profit Margin

Quick Ratio

Debt-to-Equity Ratio

2. Cost Classification: The Lees have provided you with the following costs and relevant information that are assumed for year 20XY.

A. Classify each of the costs (a. through j.) below under C. as a variable cost or a fixed cost.

B. Explain the importance of distinguishing between variable and fixed costs.

C. Prepare a budgeted income statement, assuming 600 units to be produced and sold, a per unit selling price of $85, an income tax rate of 28% and the following information.

Cost of goods sold of $35 per unit

Labor = $400/month

One part-time employee will be hired to take care of packaging and shipping. This employee will be paid $10 per hour. He or she is estimated to work 40 hours total per month.

Advertising fees = $3,000

Bank fees = $200

Phone/internet = $150 per month

Shipping = $3 per unit

Utilities = $100 per month

Office Supplies = $900

Conference Exhibitor Fee = $3000

Travel Expenses for Conference (e.g. airfare, meals, taxi) = $1200