Question The Comfy (Links to an external site.) is a product dreamed by the Speciale brothers, Michael and Brian. The Speciale Brothers hit the jackpot on Shark Tank and agreed to sell a 30% stake in their business for $50,000 on Dec 31, 2020. The first year went amazing! The company went from just a few protypes they made to over $15 million in sales. The companys first year results are given below. The retail price of a Comfy is $40, but the wholesale price (what they sell to stores for) is $30. They have a negotiated contract with a manufacturer in Bangladesh for the following orders: Production Costs Monthly Production Bill with under 20,000 order $13/Comfy Monthly Production Bill with under 20,001-99,999 order $12/Comfy Monthly Production Bill with 100,000+ order $11/Comfy Shipping costs are $4 per Comfy (either to the customer directly or to the store/QVC). Additionally, the brothers have rolled out an advertising platform and website: thecomfy.com (Links to an external site.). Customer acquisition costs (the cost of accepting credit cards and advertising on Facebook) are approximately $6 per comfy and occur the same month as the sale, regardless of the venue sold. Creating a Comfy Proforma Using the percentage of sales approach and the companys expectations of sales in the chart below, create a proforma income statement and balance sheet. Determine any additional funding needed in order to sustain the projected growth rate. The Shark wants her 30% of profits in the form of a cash dividend paid out. The Speciale brothers have promised to re-invest their money into the business for the first three years. Product Sale Forecast Online Home Shopping Network Bed Bath and Beyond YR 1 100,000 400,000 275,000 YR 2 150,000 580,000 250,000 Current Assets, Long-term assets, and account payable are 25%, 50%, and 20% of sales, respectively. Long-term debt and equity are not fixed in relation to sales. Project Instructions Excel File Download this template Download this template Using the template and the information above, create a pro forma for The Comfy. Name your file: Comfy_YourName.xls Word Document Create a Word Document explaining your expectations for additional funding to the Shark. Name your file: Comfy_YourName.docx In your memo, either explain how the cash coming in is going to be sufficient to fund growth OR outline how much additional cash will be needed. You will most likely need to make up a few small charts to make your plan clear and readable. Address what you believe should be done with any excess cash (for example: pay it out to the Speciale Brothers, keep it for a rainy day in cash, etc.) OR if you think the company should issue debt, equity, or a combination of both to fund the shortfall. Note: Points will be given not based on your choice but rather your justification of which you choose. Template for link: Income Statement Year 1 Year 2 Revenues $ 16,330,000 Manufacturing Costs $ 6,132,000 Shipping Costs $ 2,044,000 Customer Acquisition Costs $ 3,066,000 EBT $ 5,088,000 Taxes (21%) $ 1,068,480 Net Income $ 4,019,520 Balance Sheet Year 1 Year 2 Assets Current Assets 4,082,500 Long-Term Assets 8,165,000 Total Assets 12,247,500 Liabilities Accounts Payable $ 3,266,000 Long-Term Debt $ 6,067,836 Common Stock $ 100,000 Accumulated Retained Earnings $ 2,813,664 Total Liabilities and Equity $ 12,247,500