Mugs R Us, Inc An exercise in financial statements and cash flow Mugs R Us, Inc. (Mugs) is a small company that makes and sells personalized coffee mugs in Northbrook, IL. Carolina Correa, the founder, is in charge of the design and sale of the cases but her background is in design and not business. Hence, the company's books leave a lot to be desired. The startup funding for the company had come from Carolina and her friends and family. The startup funding was relatively small as the company was only selling the mugs in kiosks at a local mall. The original investors didn't really need any detailed financial analysis, but word of their product soon spread. As demand for the mugs increased, Carolina considers a major expansion. She plans on opening a store and also considers the possibility of selling her mugs to other distributors. Carolina's expansion plans require a significant investment which she plans to finance with additional funds from outside investors plus bank loans. Of course, the new investors, and especially the banks, will require better financial disclosure and detailed financial statements. Carolina has hired an NEIU graduate, Emi Castilla to evaluate the performance of the business over the past year. Having gone through the bank statements, revenue receipts, tax returns and other financial information, Emi has put together the following: Mugs presently pays out 50% of earnings as dividends to Carolina and the original investors. The company's tax rate is 20%. Prepare the following, using the attached template. - The Income Statement for 2017 and 2018. - The Balance Sheet for 2017 and 2018 . 1. The income statement for each year will look like this: Addition to retained eamings 2. The balance sheet for each year will be