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Their new strategy involves several thrusts designed to increase both sales and profits. They are going to spend twice as much as last year on Ad & Promo and anticipate sales will increase 25%. They're going to purchase new equipment for $120,000 that will reduce COGS to 33% This new equipment will be amortized at 15%/year straight line. They arc going to sell some unused land in November for $30,000 The Base Rent and Occupancy are going up by 20,000. Starting July 1, they're going to rent a new warehouse which will cost $1000 a month. They are prepaying 18 months' rent on Jul Assume the same $ amount of Amortization for the pre-existing assets Salaries and Bonuses are going to be the same %-age of sales as last year. They will be opening a new outsourced Customer Service Centre that will cost $60,000 per year (this is anticipated to pay off big time in the long run!). This expense item should be put on it's own Maintenance Expenses (as %-age of Sales) will drop by 1%. That is, they're not dropping by 1%. Their proportion of sales is dropping by 1%. Taxes are as per the table below They are going to up their game on collecting Accounts Receivable and will get the A/R down to 2 Months of sales by end of 2 The Bank will increasc the overdraft by $20,000 Payables are currently way too high (186 days worth of COGS). They're going to get that down by 55 days. Base Interest Costs will be unchanged. The owners are putting in $50,000 in new money and will be taking Common Shares of $25K and $25K in Shareholder Loans. Interest of 10% on the $25K SH Loan is payable on Dec No new bank loans are anticipated. The Entire balance as at 2015 is due and payable on Jan 15, 201 They're going to pay down 25% of the Leases Dividends are Doubling Inventories will remain the same Prepaid Revenue is anticipated to maintain their %-age of Sales They're selling $20K of new common shares and $20K of Preferred Shares to a family member. ASSIGNMENT: 1. Prepare the Cash Flow Statement for Strategic Data for 2015 2. Prepare the Income Statement, Statement of Retained Earnings, Balance Sheet and Statement of Cash Flows for the Year 2016 First 500,000 Over 500,000 Use Cash as the Plug Figure (to Balance the Balance Sheet) Ontario Tax Table Federal Ontario Total 10.50% 15% 4.50% 12% 15.00% 26.50% ASSIGNMENT: 1. Prepare the Cash Flow Statement for Strategic Data for 2015 2. Prepare the Income Statement, Statement of Retained Earnings, Balance Sheet and Statement of Cash Flows for the Year 2016 Use Cash as the Plug Figure (to Balance the Balance Sheet) Ontario Tax Table Federal Ontario Total First 500,000 Over 500,000 10.50% 15% 4.50% 12% 15.00% 26.50% Their new strategy involves several thrusts designed to increase both sales and profits. They are going to spend twice as much as last year on Ad & Promo and anticipate sales will increase 25%. They're going to purchase new equipment for $120,000 that will reduce COGS to 33% This new equipment will be amortized at 15%/year straight line. They arc going to sell some unused land in November for $30,000 The Base Rent and Occupancy are going up by 20,000. Starting July 1, they're going to rent a new warehouse which will cost $1000 a month. They are prepaying 18 months' rent on Jul Assume the same $ amount of Amortization for the pre-existing assets Salaries and Bonuses are going to be the same %-age of sales as last year. They will be opening a new outsourced Customer Service Centre that will cost $60,000 per year (this is anticipated to pay off big time in the long run!). This expense item should be put on it's own Maintenance Expenses (as %-age of Sales) will drop by 1%. That is, they're not dropping by 1%. Their proportion of sales is dropping by 1%. Taxes are as per the table below They are going to up their game on collecting Accounts Receivable and will get the A/R down to 2 Months of sales by end of 2 The Bank will increasc the overdraft by $20,000 Payables are currently way too high (186 days worth of COGS). They're going to get that down by 55 days. Base Interest Costs will be unchanged. The owners are putting in $50,000 in new money and will be taking Common Shares of $25K and $25K in Shareholder Loans. Interest of 10% on the $25K SH Loan is payable on Dec No new bank loans are anticipated. The Entire balance as at 2015 is due and payable on Jan 15, 201 They're going to pay down 25% of the Leases Dividends are Doubling Inventories will remain the same Prepaid Revenue is anticipated to maintain their %-age of Sales They're selling $20K of new common shares and $20K of Preferred Shares to a family member. ASSIGNMENT: 1. Prepare the Cash Flow Statement for Strategic Data for 2015 2. Prepare the Income Statement, Statement of Retained Earnings, Balance Sheet and Statement of Cash Flows for the Year 2016 First 500,000 Over 500,000 Use Cash as the Plug Figure (to Balance the Balance Sheet) Ontario Tax Table Federal Ontario Total 10.50% 15% 4.50% 12% 15.00% 26.50% ASSIGNMENT: 1. Prepare the Cash Flow Statement for Strategic Data for 2015 2. Prepare the Income Statement, Statement of Retained Earnings, Balance Sheet and Statement of Cash Flows for the Year 2016 Use Cash as the Plug Figure (to Balance the Balance Sheet) Ontario Tax Table Federal Ontario Total First 500,000 Over 500,000 10.50% 15% 4.50% 12% 15.00% 26.50%
