Janelle Higgins has decided to start her own event planning business (JH Events) in the upcoming year. She believes that she has an innovative business model and is seeking a business loan. Therefore, Janelle is in the process of putting together a business plan. As part of her business plan, Janelle must include forecasted financial statements for the first 5 years. The forecasted financial statements to be included are: Income Statement, Balance Sheet, and Statement of Cash Flows First year sales are projected to be S 150,000 and grow 3% for the next two years and 596 Cost of sales are projected to be 45% of revenue in the first year and is expected to grow Advertising expenses are projected to be 4% of each year's projected revenue. Janelle will need to rent equipment for the events she puts on. She has an agreement with a rental company for a fa of $500 per month and is sufficient to cover all of her estimated events. Starting in Year 3, she expects to be able to handle more events and the rental rate will increase to $750 per month Janelle plans to start off by hiring 2 people to work the events with her. Each person will be paid $100 per event and is expected to work 4 events per month. After Year 3, Janelle plans to hire 2 additional people. (At this point, each person will be paid $100 per event and is expected to work 3 events per month). Office rent is estimated to be a flat rate of $1,200 per month. Utilities for the rented office space are estimated to be $300 per month The office space Janelle plans to rent is unfurnished. She plans to purchase $15,000 worth of furniture and fixtures at the beginning of Year 1. The furniture and fixtures will have a useful life of 15 years. Janelle will also need to buy some computers and other office equipment that she will purchase for $10,000 also at the beginning of Year 1. The office equipment will have a useful life of 5 years. Both the furniture and fixtures as wel as the equipment will be depreciated on a straight-line basis (Assume zero salvage value for calculations). HINT: Fixed Assets Accumulated DepreciationNet Fixed Assets Janelle is asking for a 3-year bank loan for $60,000. The estimated interest on the loan is 390 (assume simple interest). She will pay the loan back in $20,000 installments tarting in Year 2. Interest is due at the end of each year and paid in January of the following year. The tax rate for JH Events is 35%. Taxes for the year just ended are paved in the first quarter of the following year. . Janelle will inest S30,000 ofher own money and from family and friends to start the business. This S30,000 investment of capital is also the beginning bank balance of Year1 Schedule of expected year-end balances of selected accounts: . Year 1 Year 4 6,000 Year 5 Accounts Recaivable Accounts 5,000 6,000 Customer 3,000 At the end of Year 2, Janelle will purchase an insurance policy to help cover the business The policy has a tem of 3 years and coverage tart athe beginning of Year 3. The policy costs $12,000 During Year 3, anelle plans to personally invest S10,000 of additional capital into the CASHFLOW STATEMENT Clipboard Styles FORECASTED BALANCE SHEET Net Income Add back depreciation 4 Assets s Cash 6 Accounts Receivable RATIOS 7 Changes in working capital EAR 1 YEAR 2 EAR 3 Prepaid Insaran D TO TWO D 6 AVERAGE COLLECTION PLRIOO AL ASSET TLRNOVEN CURRENT RATN 10 Accounts Payable 11 Customer Deposs 2 Iraerest pajable 9 Furniture& Flxtures (net) Ecuipment (net) 14 Cosh flows from opersting ectivities 13 Liablnies 14 Accounts payable 5 Customer deposits 6 Interest paysble IMES INTEREST CARNED TMARGIN 17 Amount pad for equipment 12 NET FROFIT MAREIN 19 Cash flow from irvesting sctivities 1 Curmers Uzbilides 0 Tat liailities 17commem on the projected heath of the compeny (Years 1-5 in terms af quldity, scdvity, and profitablity, As a nan 23 Proceeds from issuing copitsl 24 Repayment o 25 Cash fiow from financing activities 22 Sockholder's Equlty 23 Capital 4 Retained Eamirgs 25 Totel Socknolider's tquity 26 Tota Liablhies & Siockho der's Equlty 19 the bsines en f bank losn 29 Endng Cash balance Sheet Sheet2 Janelle Higgins has decided to start her own event planning business (JH Events) in the upcoming year. She believes that she has an innovative business model and is seeking a business loan. Therefore, Janelle is in the process of putting together a business plan. As part of her business plan, Janelle must include forecasted financial statements for the first 5 years. The forecasted financial statements to be included are: Income Statement, Balance Sheet, and Statement of Cash Flows First year sales are projected to be S 150,000 and grow 3% for the next two years and 596 Cost of sales are projected to be 45% of revenue in the first year and is expected to grow Advertising expenses are projected to be 4% of each year's projected revenue. Janelle will need to rent equipment for the events she puts on. She has an agreement with a rental company for a fa of $500 per month and is sufficient to cover all of her estimated events. Starting in Year 3, she expects to be able to handle more events and the rental rate will increase to $750 per month Janelle plans to start off by hiring 2 people to work the events with her. Each person will be paid $100 per event and is expected to work 4 events per month. After Year 3, Janelle plans to hire 2 additional people. (At this point, each person will be paid $100 per event and is expected to work 3 events per month). Office rent is estimated to be a flat rate of $1,200 per month. Utilities for the rented office space are estimated to be $300 per month The office space Janelle plans to rent is unfurnished. She plans to purchase $15,000 worth of furniture and fixtures at the beginning of Year 1. The furniture and fixtures will have a useful life of 15 years. Janelle will also need to buy some computers and other office equipment that she will purchase for $10,000 also at the beginning of Year 1. The office equipment will have a useful life of 5 years. Both the furniture and fixtures as wel as the equipment will be depreciated on a straight-line basis (Assume zero salvage value for calculations). HINT: Fixed Assets Accumulated DepreciationNet Fixed Assets Janelle is asking for a 3-year bank loan for $60,000. The estimated interest on the loan is 390 (assume simple interest). She will pay the loan back in $20,000 installments tarting in Year 2. Interest is due at the end of each year and paid in January of the following year. The tax rate for JH Events is 35%. Taxes for the year just ended are paved in the first quarter of the following year. . Janelle will inest S30,000 ofher own money and from family and friends to start the business. This S30,000 investment of capital is also the beginning bank balance of Year1 Schedule of expected year-end balances of selected accounts: . Year 1 Year 4 6,000 Year 5 Accounts Recaivable Accounts 5,000 6,000 Customer 3,000 At the end of Year 2, Janelle will purchase an insurance policy to help cover the business The policy has a tem of 3 years and coverage tart athe beginning of Year 3. The policy costs $12,000 During Year 3, anelle plans to personally invest S10,000 of additional capital into the CASHFLOW STATEMENT Clipboard Styles FORECASTED BALANCE SHEET Net Income Add back depreciation 4 Assets s Cash 6 Accounts Receivable RATIOS 7 Changes in working capital EAR 1 YEAR 2 EAR 3 Prepaid Insaran D TO TWO D 6 AVERAGE COLLECTION PLRIOO AL ASSET TLRNOVEN CURRENT RATN 10 Accounts Payable 11 Customer Deposs 2 Iraerest pajable 9 Furniture& Flxtures (net) Ecuipment (net) 14 Cosh flows from opersting ectivities 13 Liablnies 14 Accounts payable 5 Customer deposits 6 Interest paysble IMES INTEREST CARNED TMARGIN 17 Amount pad for equipment 12 NET FROFIT MAREIN 19 Cash flow from irvesting sctivities 1 Curmers Uzbilides 0 Tat liailities 17commem on the projected heath of the compeny (Years 1-5 in terms af quldity, scdvity, and profitablity, As a nan 23 Proceeds from issuing copitsl 24 Repayment o 25 Cash fiow from financing activities 22 Sockholder's Equlty 23 Capital 4 Retained Eamirgs 25 Totel Socknolider's tquity 26 Tota Liablhies & Siockho der's Equlty 19 the bsines en f bank losn 29 Endng Cash balance Sheet Sheet2