Prepare the balance sheet and income statement for this 5 year period

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. You do not need to prepare a statement of cash flows at this time. This is a golf course.

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 1 Year 2 Year 3 Year 4 Year 5

Cash

Accounts receivable

Inventory

Other current assets=0

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=0

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 1 Year 2 Year 3 Year 4 Year 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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