The company is planning to open another location in 2018 . Prepare pro forma financials for 2018 for the new location using the following information: I need help interpreting the word problems found underneath "PEYTON APPROVED PRO FORMA INFORMATION", so that I can figure out how to prepare the pro forma financials for 2018 using all the information found on the Financial statements from 2017 too.

Milestone 2.Hints and Tips Milestone-2 Hints-Sep-30, 2020-8:52 AM 1 For Milestone-2 you will be creating pro-forma-financial statements. A Pro-forma financial statement is just another term for estimated or projected-financial-statements. I 1 Base your proforma financial statements on the-2017-financial statements in the Yellow-Tab- NOT the revised-2017-financials-from-Milestone 1-in-the-blue tabs. 1 Here are some check-figures: 1 Proforma Income-Statement-Net-Income:-$74,036.30 Proforma-Balance Sheet: Total Assets =-Total:Liabilities & Equity=-$117,534.209 As the instructions-state, you will be multiplying most of the items from the 2017-income statement-by: 8. or-0.8.1 1 The-line-items with specific instructions that should not be multiplied by: 8 are listed below. The instructions for calculating these accounts are in the Milestone-2-Instructions tab.[ Rent Expenses Wages-Expenser Depreciation Expense Accounts Receivable Baking Supplies Merchandise Inventory Baking Equipment Accumulated-Depreciation Accounts Payable Notes Payable Retained Earnings (should-equal-net-income from your Pro-Forma Income Statement). T 7 8 INSTRUCTIONS FOR MILESTONE 2 (Due Module 5) 9 10 IMPORTANT NOTE: 11 12 Make sure to completely review the Rubric for Milestone 2 13 14 Use the data from Milestone 1 and this Milestone to finalize your final project due in Final Project (Module 7) 15 16 17 18 ITEMS TO COMPLETE FOR THIS MILESTONE (Green Tabs) : 19 20 GENERAL 21 22 Use information from Milestone 1 and the plan to open a new location (see bottom of page) for your statements 23 24 PRO FORMA FINANCIAL STATEMENTS 25 Using the Preliminary Statements as a base, prepare the following Pro Forma Financial Statements for the proposed new location (pro forma statements in this case are budgeted statements for 2018 based on the new location scenario at the bottom of the page) 26 27 28 Pro Forma Income Statement Pro Forma Balance Sheet 29 32 33 34 PEYTON APPROVED PRO FORMA INFORMATION 35 The company is planning to open another location in 2018. Prepare pro forma financials for 2018 for the new location using the following information: 36 37 38 1. Cost of leasing commercial space: $1,500 per month. 39 2. Cost of new equipment: $15,000, purchased with a long-term note. Use straight line depreciation assuming a seven-year life, no residual value. Use full year's depreciation for the first year. Equipment purchase was financed with a long-term note. 40 41 3. Cost of hiring and training new employees: three at $25,000 each for the first year. 42 43 4. Except as noted below in 1, 2, 3, and 5, assets, current liabilities, sales, costs, and expenses are expected to be 80% of the existing store (from preliminary statements) except no stock. Retained earnings = net income 44 45 5. Cash: $7,000. Accounts receivable amount to 4.0 turns (accounts receivable turnover will be 4.0); inventory amount to show 3.0 turns (inventory turnover will be 3.0). No stock will be issued. Retained earnings are to equal net income. Additional financing of $5,000 will be long-term. Add remaining amount needed to balance into accounts payable. 46 47 Peyton-Approved-uses-the-following accounting practices: 1 1 Inventory:-Periodic,LIFO-for-both-baking and merchandise Equipment:-Straight-line-method-used-for-equipment, 1 Business-Financing-Information:-Use this-information-to-calculate interest rates-and-insurance information, and-to- assess-their-impact-on-the-company's financial-obligations: 1 6%-interest-note payable-was-made-on-Jan-31, 2017, and-is-due-Feb-1, 2019.4 5-year-loan-was- made-on-June-1, 2016. Terms are:7.5% annual-rate, interest-only-until-due-date. I Insurance::Annual-policy.covers 12 months, purchased-in-February, covering-March-2017-to-February 2018.-No- monthly adjustments have been made. I 1 Preliminary 2 3 Peyton Approved Income Statement For Year Ended 12/31/2017 4 5 6 7 $ 327,322.55 1,205.64 8 9 328,528.19 10 Bakery Sales Merchandise Sales Total Revenues Cost of Goods Sold - Baked Cost of Goods Sold - Merchandise Total Cost of Goods Sold Gross Profit 105,834.29 859.77 11 12 106,694.06 221,834.13 13 14 15 16 17 Operating Expenses: 18 19 20 Rent Expense Wages Expense Misc. Supplies Expense Business License Expense 24,549.19 10,670.72 3,000.46 2.045.77 21 22 23 24 25 Misc. Expense Depreciation Expense Insurance Expense Advertising Expense Interest Expense Telephone Expense Total Operating Expenses: 1,363.84 677.86 1,091.08 1,549.74 818.31 490.98 26 27 28 29 46,257.95 30 31 Net Income 175,576.18 A B D E C Preliminary 1 2 3 3 4 5 4 Peyton Approved Statement of Retained Earnings For Year Ended 12/31/2017 6 7 8 Beginning Balance: plus Net Income $ 50,144.84 175,576.18 9 10 11 12 13 less Dividends: Ending Balance 105,000.00 $120,721.02 1 Preliminary 2 3 Peyton Approved Balance Sheet As of December 31, 2017 4 5 6 7 8 Liabilities and Owners' Equity Current Liabilities: Accounts Payable 20,262.11 Wages Payable 3,383.28 Interest Payable 211.46 9 Assets Current Assets: Cash Accounts Receivable Baking Supplies Merchandise Inventory Prepaid Rent Prepaid Insurance Misc. Supplies 10 11 67,520.04 68,519.91 15,506.70 1,238.07 2,114.55 2,114.55 170.49 12 13 14 15 16 17 Total Current Assets 157,184.31 Total Current Liabilities 23,856.85 18 19 20 Long Term Liabilities: Notes Payable Total Long Term Liabilities: Long Term/Fixed Assets: Baking Equipment 5,000.00 21 14,000.00 5,000.00 22 Accumulated Depreciation Net Fixed assets -1,606.44 23 12,393.56 Total Liabilities: 28,856.85 24 25 Common Stock Retained Earnings 20,000.00 120,721.02 26 27 28 Total Equity 140,721.02 29 30 Total Assets: 169,577.87 Total Liabilities & Equity 169,577.87 1 Preliminary 2. 3 4 5 6. 2 3 4 Peyton Approved Statement of cash Flow For Year Ended 12/31/2017 5 Net Income Depreciation Expense $ 175,576.18 677.86 8 176,254.04 7 8 9 10 11 12 13 14 15 16 17 18 Increase in Accounts Receivable Increase in Baking Supplies Increase in Merchandise inventory Increase in Prepaid Rent Increase in Prepaid Insurance Increase in Misc. Supplies Increase in Accounts Payable Increase in Wages Payable Increase in Interest Payable (25,886.91) (8,187.84) (443.10) (449.55 (1,004.55) (114.99) 3,292.11 1,850.48 44.96 19 Operating Cash Flow 145,354.65 20 21 22 23 24 Cash Flow from Investments Equipment Purchases (6,000.00) 25 Cash Flow from Investments (6,000.00 Cash Flow from Financing Repayment of Note Payable Dividends Paid (10,000.00) (105,000.00) Cash Flow from Financing (115,000.00 26 27 28 29 30 31 32 33 34 35 36 37 Net Cash Flow 24,354.65 Beginning Cash 43, 165.39 Ending Cash 67,520.04 1 2 3 Peyton Approved Second Location Pro Forma Income Statement For Year Ending 12/31/2018 Instructions Milestone 2 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 B C D G H K L M 1 E F Peyton Approved Second Location Pro Forma Balance Sheet As of December 31, 2018 2 3 Instructions Milestone 2 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Milestone 2.Hints and Tips Milestone-2 Hints-Sep-30, 2020-8:52 AM 1 For Milestone-2 you will be creating pro-forma-financial statements. A Pro-forma financial statement is just another term for estimated or projected-financial-statements. I 1 Base your proforma financial statements on the-2017-financial statements in the Yellow-Tab- NOT the revised-2017-financials-from-Milestone 1-in-the-blue tabs. 1 Here are some check-figures: 1 Proforma Income-Statement-Net-Income:-$74,036.30 Proforma-Balance Sheet: Total Assets =-Total:Liabilities & Equity=-$117,534.209 As the instructions-state, you will be multiplying most of the items from the 2017-income statement-by: 8. or-0.8.1 1 The-line-items with specific instructions that should not be multiplied by: 8 are listed below. The instructions for calculating these accounts are in the Milestone-2-Instructions tab.[ Rent Expenses Wages-Expenser Depreciation Expense Accounts Receivable Baking Supplies Merchandise Inventory Baking Equipment Accumulated-Depreciation Accounts Payable Notes Payable Retained Earnings (should-equal-net-income from your Pro-Forma Income Statement). T 7 8 INSTRUCTIONS FOR MILESTONE 2 (Due Module 5) 9 10 IMPORTANT NOTE: 11 12 Make sure to completely review the Rubric for Milestone 2 13 14 Use the data from Milestone 1 and this Milestone to finalize your final project due in Final Project (Module 7) 15 16 17 18 ITEMS TO COMPLETE FOR THIS MILESTONE (Green Tabs) : 19 20 GENERAL 21 22 Use information from Milestone 1 and the plan to open a new location (see bottom of page) for your statements 23 24 PRO FORMA FINANCIAL STATEMENTS 25 Using the Preliminary Statements as a base, prepare the following Pro Forma Financial Statements for the proposed new location (pro forma statements in this case are budgeted statements for 2018 based on the new location scenario at the bottom of the page) 26 27 28 Pro Forma Income Statement Pro Forma Balance Sheet 29 32 33 34 PEYTON APPROVED PRO FORMA INFORMATION 35 The company is planning to open another location in 2018. Prepare pro forma financials for 2018 for the new location using the following information: 36 37 38 1. Cost of leasing commercial space: $1,500 per month. 39 2. Cost of new equipment: $15,000, purchased with a long-term note. Use straight line depreciation assuming a seven-year life, no residual value. Use full year's depreciation for the first year. Equipment purchase was financed with a long-term note. 40 41 3. Cost of hiring and training new employees: three at $25,000 each for the first year. 42 43 4. Except as noted below in 1, 2, 3, and 5, assets, current liabilities, sales, costs, and expenses are expected to be 80% of the existing store (from preliminary statements) except no stock. Retained earnings = net income 44 45 5. Cash: $7,000. Accounts receivable amount to 4.0 turns (accounts receivable turnover will be 4.0); inventory amount to show 3.0 turns (inventory turnover will be 3.0). No stock will be issued. Retained earnings are to equal net income. Additional financing of $5,000 will be long-term. Add remaining amount needed to balance into accounts payable. 46 47 Peyton-Approved-uses-the-following accounting practices: 1 1 Inventory:-Periodic,LIFO-for-both-baking and merchandise Equipment:-Straight-line-method-used-for-equipment, 1 Business-Financing-Information:-Use this-information-to-calculate interest rates-and-insurance information, and-to- assess-their-impact-on-the-company's financial-obligations: 1 6%-interest-note payable-was-made-on-Jan-31, 2017, and-is-due-Feb-1, 2019.4 5-year-loan-was- made-on-June-1, 2016. Terms are:7.5% annual-rate, interest-only-until-due-date. I Insurance::Annual-policy.covers 12 months, purchased-in-February, covering-March-2017-to-February 2018.-No- monthly adjustments have been made. I 1 Preliminary 2 3 Peyton Approved Income Statement For Year Ended 12/31/2017 4 5 6 7 $ 327,322.55 1,205.64 8 9 328,528.19 10 Bakery Sales Merchandise Sales Total Revenues Cost of Goods Sold - Baked Cost of Goods Sold - Merchandise Total Cost of Goods Sold Gross Profit 105,834.29 859.77 11 12 106,694.06 221,834.13 13 14 15 16 17 Operating Expenses: 18 19 20 Rent Expense Wages Expense Misc. Supplies Expense Business License Expense 24,549.19 10,670.72 3,000.46 2.045.77 21 22 23 24 25 Misc. Expense Depreciation Expense Insurance Expense Advertising Expense Interest Expense Telephone Expense Total Operating Expenses: 1,363.84 677.86 1,091.08 1,549.74 818.31 490.98 26 27 28 29 46,257.95 30 31 Net Income 175,576.18 A B D E C Preliminary 1 2 3 3 4 5 4 Peyton Approved Statement of Retained Earnings For Year Ended 12/31/2017 6 7 8 Beginning Balance: plus Net Income $ 50,144.84 175,576.18 9 10 11 12 13 less Dividends: Ending Balance 105,000.00 $120,721.02 1 Preliminary 2 3 Peyton Approved Balance Sheet As of December 31, 2017 4 5 6 7 8 Liabilities and Owners' Equity Current Liabilities: Accounts Payable 20,262.11 Wages Payable 3,383.28 Interest Payable 211.46 9 Assets Current Assets: Cash Accounts Receivable Baking Supplies Merchandise Inventory Prepaid Rent Prepaid Insurance Misc. Supplies 10 11 67,520.04 68,519.91 15,506.70 1,238.07 2,114.55 2,114.55 170.49 12 13 14 15 16 17 Total Current Assets 157,184.31 Total Current Liabilities 23,856.85 18 19 20 Long Term Liabilities: Notes Payable Total Long Term Liabilities: Long Term/Fixed Assets: Baking Equipment 5,000.00 21 14,000.00 5,000.00 22 Accumulated Depreciation Net Fixed assets -1,606.44 23 12,393.56 Total Liabilities: 28,856.85 24 25 Common Stock Retained Earnings 20,000.00 120,721.02 26 27 28 Total Equity 140,721.02 29 30 Total Assets: 169,577.87 Total Liabilities & Equity 169,577.87 1 Preliminary 2. 3 4 5 6. 2 3 4 Peyton Approved Statement of cash Flow For Year Ended 12/31/2017 5 Net Income Depreciation Expense $ 175,576.18 677.86 8 176,254.04 7 8 9 10 11 12 13 14 15 16 17 18 Increase in Accounts Receivable Increase in Baking Supplies Increase in Merchandise inventory Increase in Prepaid Rent Increase in Prepaid Insurance Increase in Misc. Supplies Increase in Accounts Payable Increase in Wages Payable Increase in Interest Payable (25,886.91) (8,187.84) (443.10) (449.55 (1,004.55) (114.99) 3,292.11 1,850.48 44.96 19 Operating Cash Flow 145,354.65 20 21 22 23 24 Cash Flow from Investments Equipment Purchases (6,000.00) 25 Cash Flow from Investments (6,000.00 Cash Flow from Financing Repayment of Note Payable Dividends Paid (10,000.00) (105,000.00) Cash Flow from Financing (115,000.00 26 27 28 29 30 31 32 33 34 35 36 37 Net Cash Flow 24,354.65 Beginning Cash 43, 165.39 Ending Cash 67,520.04 1 2 3 Peyton Approved Second Location Pro Forma Income Statement For Year Ending 12/31/2018 Instructions Milestone 2 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 B C D G H K L M 1 E F Peyton Approved Second Location Pro Forma Balance Sheet As of December 31, 2018 2 3 Instructions Milestone 2 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22