It is necessary to understand accounting to analyze financial information.To assist in this effort, the following case problem describes a start up sports enterprise.You are to formulate a balance sheet and income statement over a five year period from the facts given.

The facts in the case study are:

1.Borrow $600,000 at 8% over 10 years from Nations Bank.

2.Investor provides $400,000 to fund your sports enterprise.

3.Long term assets depreciated on a straight line basis over 20 years.

4.Short term assets depreciated over five years using the straight line basis.

5.Green fees - 7,000 rounds at $20.00 per round.Increases 875 rounds per year.

6.Driving range revenue - 3,424 units @ $5.00 per customer.

The units increase at 428 per year.

7.Annual memberships - 192 @ $250.00 per year.Increases by 24 memberships each year with no decrease in initial members.

8.Initiation fees were $14,000 in the first year and increased $1,750 per year.

9.Pro shop revenue was $48,000 and increased $6,000 per year.

10.Bar/lounge grossed $18,400 the first year and increased $2,300 per year.

11.Cost of Goods Sold:

Pro - shop:Year one $35,200 and increased $4,400 per year.

Bar/lounge:Year one $11,200 and increases $1,400 per year.

12.Other Given information:

Salaries:$115,420,increases $3,463 per year.

Utilities: $1,000, increases $100 per year.

Maintenance:$600, increases $75 per year.

13.Spent $800,000 on a building.

Spent $100,000 on land.

Spent $7,500 on equipment.

Spent $16,000 on Inventory.Inventory increases by $2,000 per year.

14.Accounts Payable is $10,000 in year one through year five.

15.Purchased an additional $750 a year in equipment starting in year two (2).

16.Accounts receivable balance year end $8,040. Increases $1,005 per year (2-5).

17.Don't forget interest expense.

Don't forget depreciation expense.

Income tax expense should be calculated at 34%.

TO DO:PREPARE BALANCE SHEET AND INCOME STATEMENTS FOR A FIVE YEAR PERIOD.Use the following format.

Sport Golf Enterprises

BALANCE SHEET

Assets:Year 1Year 2Year 3Year 4Year 5

Cash

Accounts receivable

Inventory

Other current assets

Total current assets

Land

Building

Equipment

Accum. Deprec.

Total PP&E__________________________________________________

Total Assets

Liabilities and Owner Equity:

Current installments

of Long-term debt

Accounts payable

Total current liab.

Long term debt

Other L-T liabilities

Total liabilities

Owners equity:

Owner's equity

Retained earnings

Total equity

Total liabilities

and Equity

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Golf Sport Enterprises

Income Statement

Year 1Year 2Year 3Year 4Year 5

Revenues:

Green fees

Driving range

Annual membership dues

Membership initiation fees

Pro shop

Bar/lounge

Total revenues

Less: Cost of goods sold

Pro shop

Bar/lounge

Total COGS

Gross profit

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Operating expenses

Salaries

Utilities

Maintenance

Depreciation

Total operating expenses

Earnings before interest expense

Interest expense

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Earnings before income tax

Income tax expense

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Net income (loss)

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