Marion has a muffin shop located in a rented 1200 square foot building in a small town of approximately 10,000 people. The only major competition includes local restaurants, a donut shop, and a coffee shop located in the local grocery. Marion sells her wonderful Magic Muffins for $5.95 each. The cost to produce these muffins is $3.25 each which includes all ingredients. She is open six days a week, closed Sundays and 10 holidays throughout the year (use a 365 day year for calculations). She averages 85 sales per day. Her rent is $1,000 per month and she has a 5 year lease. Typically she spends $3,600 per year on radio and print advertising. Utilities average $900 per month. Phone service including phone, cell phone and interned is $300 per month, vehicle gas averages $85.00 per month. Insurance is $2,475 per year. Paper supplies including napkins cupcake paper liners are included in the cost of goods. She is currently leasing a large mixer and dishwasher at $150.00 per month total. Her store license is $795 per year, she has a budget of $500 per year for replacement pans and other equipment. Marion has one part time employee that is paid $12/ hour and works 25 hours per week. She owns a delivery vehicle valued at $22,000. Her store equipment has a value of $11,500. And she maintains an inventory of $1,500. Since starting her business she has managed to save $5,000 in her business operating account and she has a savings account of $20,000. She has annual depreciation of $2,500 and accumulated depreciation in the amount of $15,000. Currently she has $500.00 in accounts receivable and $1,200.00 in accounts payable. She also has a $30,000 five year bank loan at 6%.

It has been three years and Marions business is doing well. She wants to expand and offer coffee and specialty cakes. Construct a new balance sheet and profit and loss statement using the following information: The loan is currently at $20,000 and she is seeking an additional loan of $15,000 for equipment Cost of goods for muffins have increased 5% Selling price has remained the same for muffins. Selling and administrative expenses have increased 3% (rent and depreciation have remained the same) Selling price of cakes is $9.95 each and Marion estimates that she will sell 10 per week Cost of making the cakes is $6.85 each Selling price of coffee is $3.95 per cup (No free refills) Cost of producing the coffee is $.59 per cup. She estimates selling 50 cups per day. Due to the increase business she needs to hire an additional employee for a total of two. Each working 25 hours per week at $12.00 per hour.