Require an income statement as per below attached blank income statement. Multiple assumptions will be required. Please list assumptions made. Thank you!

Jac Grubertson Lawn Care

Case study

In 2013, when Jaci (Jac to her friends) Grubertson was only 15 years old, her uncle Jack asked her to mow the lawn every week and paid her $6. Every week! She was able to buy some clothes and go to the movies with her friends from Mazomanie (Wisconsin) High School.

Then in 2020, it was a hard time for everyone in the world dealing with COVID-19. The restaurant where Jac worked went out of business in March of 2020. People could not pay rent because they lost their jobs. But Jac was living in her Uncle Jacks basement and he said that she could skip paying rent for 2 or 3 months. Jac told her uncle that with unemployment payments and COVID relief payments, she actually had more money than when she was working, but he wanted to support her so he told her to just take a month or two off from paying rent.

One day in April, Jac was driving her Kia to visit friends in Lone Rock and stopped to watch the neighbor mow his lawn. She thought back on those days when she first started mowing lawns and had an epiphany. She could start her own lawn mowing company! Her business class at the Community College last year taught her exactly what she needed to do. That night when she got home to her basement apartment, she started writing a business plan.

She would call her business Jac Grubertson Lawn Care. Mowing was just the first step. She would offer edging and fertilizing, too. She would put together package deals and a friends and family discount. She would talk to the managers at the Historical Society and the Bible Fellowship Church to maybe get a contract to mow their lawns every week. She could possibly even get a contract to mow the lawns at the cemetery. She would advertise at the Hardware store and Roundys and the Dollar store. She would put an ad in the Mazomanie Nickels. She could advertise in businesses as far away as Sauk City or Baraboo. Maybe she could even get her former boyfriend to build her a website.

As part of her due diligence, she made a list of businesses in other cities she could call to see what they were charging. She didnt want to call anyone who would be her competition because she felt like that would be dishonest. She figured that she would not be able to charge as much as someone in Oconomowoc or Dubuque, but she could use their prices as a starting point and to show that she was cheaper. Pricing was critical, too high and she would have no clients, too low and she would not make any money. And she made a list of all her friends and family who lived in homes not apartments. She would start contacting them as soon as she had a business license. She also started a pro forma income statement and cash flow statement. She still had her textbook from the Community College. The first thing on the income statement was income. She calculated that she would start slow and only mow 2 lawns per day (1 client both front and back lawns) for 4 days each week. She would charge $50 to mow and edge a lawn ($100 for both front and back). Fertilizing would be $40 more for both lawns. She was hoping to do 2 per month. Her expenses would be gas ($3.29 per gallon) for the car and mower and fertilizer. To keep her calculations simple she added $4 for gas for each lawn (for both car and mower) and the cost for fertilizer at $18 per lawn (she bought 8 bags to start ($18 per bag)). For lawns 2000 to 3000 square feet, she would charge 30% more. Lawns larger than 4000 square feet would be double. Anything too big or weird shaped she would have to just measure it and submit a bid. And to make it more appealing, she would give a 10% discount to anyone who referred a new client.

Then she had to decide how much money she needed to get started. She made a list of things she would need to buy. She would need a lawn mower, an edger, a fertilizer spreader, a gas can, gloves and a little trailer. After she made that list, she realized that she could not pull a trailer behind her car because she didnt have a trailer hitch so she added that to her list. Here it is:

lawn mower	800
edger	120
fertilizer spreader	63
gas can	25
broom	20
gloves	18
utility trailer	1900
trailer hitch	140

The only good things that came out of the COVID crisis were the enhanced unemployment payments, the stimulus check, and lower interest rates. Jac decided to capitalize on those lower rates by getting a bank loan. She could get a business loan from the bank (but she had to offer the Kia as added collateral) for only 3.5% interest. She knew she would never need all that much money, but she got a 10-year business loan for $20,000.

When Jac was looking into a business license, she decided to check Sauk County because she had been planning that when she had enough money she would leave Uncle Jacks basement and rent an apartment in Sauk City. When she visited the city hall in Sauk City, to get a business license, the clerk overheard her questions, asked about her business, and then suggested that she talk with the director of the Community Development department Marcus Tpeki. She left that meeting with a sketch she drew of the City Hall, her first weekly contract (start in May (mow only)), and a DBA business license ($89).

Even though she had a 10-year loan from the bank, Jac decided to ask Uncle Jack about borrowing his lawnmower and Weed Wacker (it has a lawn edger setting) so she could cut down on expenses. He was impressed with all she had accomplished and agreed to let her borrow them if she would pay him $10 for each lawn she cut. She could also borrow his little trailer for no charge. And she still had 2 more months of free rent from him!

Her business prospects were certainly on the rise and to make it even better, Mitch Borgen agreed to have her mow his lawns every week, both front and back. He also said to go ahead and fertilize them at the same time (but only once per month (more would burn the grass)). He told her that he was very sure he could convince his 2 neighbors to also sign up for her lawn care. Sure enough Margie Rutherford signed up the very next day. Give me what Mitch is getting, she said, He always makes the best business deals. Then Margie signed up her cousin for the same service.

With so much initial success, Jac spent $69 on business cards and $22 on fliers she could put in stores and maybe hand out at the High School Spring Fling car wash. From the fliers, she got several calls and Ray Bertleson signed up for both of his lawns - mow only.

Jac Grubertson Lawn Care
Income Statement
For May 2020
Revenue:
	Gross Sales
Cost of Goods Sold:
	Beginning Inventory
	Add:	Fertilizer
		Direct Labor
		Other
		Mower rental
		Gas expense
				$0.00
	Less:	Ending Inventory
	Cost of Goods Sold			$0.00		$0.00
	Gross Profit (Loss)					$0.00
Expenses:
	Advertising
	Amortization
	Bad Debts
	Bank Charges
	Business cards
	Credit Card Fees
	Depreciation
	Fliers
	Insurance
	Interest (Bank)
	Maintenance
	fertilizer spreader
	gas can 5 gal.
	broom
	gloves
	trailer hitch
	Miscellaneous
	Office Expenses
	Business License
	Telephone
	gasoline
	Utilities
	Vehicle Expenses
	Wages
	Total Expenses			$0.00		$0.00
	Net Income					$0.00

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