Reids Rides sells high quality BMX bikes for $485 each. The cost to produce the bikes average $335.00 each. Accumulated d epreciation is $6,000 and depreciation expenses run $2,000 per year. Utilities average $1100 per month, Insurance is $2,475 per year, vehicle gas averages $85 per month, phone and internet is $255 per month and rent is $2,000 per month . Vehicle license and other fees are $795 per year. In addition Reid has a budget for tools at $75 per month. Last year Reid sold 597 bikes. Part tim e help is $7,800 per year. Reid has the following assets, miscellaneous parts $8 955 , ( List the miscellaneous parts as a separate item from the inventory of bikes) tools $4,600 delivery/service truck $22,000, office equipment, display racks, computers, phones equal $17,000 with an inventory of 80 bikes. The company has a five - year loan. The loan amount at the start of year was $55,000 with an Interest rate of 6.5%. Operating Cash is $10,000, Cash in savings of 30,000 for a total of $40,000 . Reid averages $4,500 in accounts receivable and $2,0 00 in accounts payable . Reid s tax rate is 24%.

1. Construct in good form an income statement. What is the profit for Reids Rides?

2. Develop a balance sheet for Reids Rides (please just leave balance sheet unbalanced)

3. Calculate the breakeven amount in dollars for Reids Rides for the current year. (Do not include depreciation or taxes) How many bikes must be sold to meet the breakeven amount?

4. How many bikes must Reid Sell to make a profit of $30,000 and for $50,000? (Make sure to include depreciation and taxes)

5. Using the breakeven needed to earn the profit from #4 above construct a NEW income statement that shows the $30,000 and $50,000 owners salary and the number of bikes needed.

6. Reid believe s sales will increase 10% for next year. In addition he expects cost of goods to increase by 3% and other expenses to increase 5%. (Loan payments remain the same) The owner wants a profit of $30,000. Construct an income statement that reflects the increase in sales.