Using the information circled in the below image, solve for Interest on Mortgages/Loans in the Pro Forma Statement
NOTE: 202X is 2022 and 202Y is 2023
| Pro Forma Income Statement |
| Make It So Kitchens & Cabinets |
| for Fiscal 2023 |
| REVENUE | |
| Sales of Cabinets | 7,200,000 |
| Sales of Refurbishing | 1,680,000 |
| TOTAL REVENUE | 8,880,000 |
| - | - |
| COGS | |
| Wages & Benefits | 2,650,000 |
| Materials | 3,220,000 |
| Equipment and Depreciation | 36,000 |
| Freight and Shipping | 214,000 |
| TOTAL COGS | 6,120,000 |
| - | - |
| GROSS PROFIT | 2,760,000 |
| - | - |
| SELLING, GENERAL, & ADMIN EXPENSES | |
| Personnel Costs | 650,000 |
| Commissions | IGNORE |
| Credit Card Fees | 90,000 |
| Insurance | 13,800 |
| Interest on Mortgages/Loans | ? - Solve for this |
| Marketing Expenses | 120,000 |
| Office Expenses | 76,600 |
| Property Taxes | 86,000 |
| Repairs and Maintenance | 50,000 |
| Rent - Downtown Office | |
| Consultant - Computer Systems | 30,000 |
| TOTAL SELLING, GENERAL, & ADMIN EXPENSES | 1,116,400 |
Use the below Balance Sheet IF NEEDED:
| Balance Sheet |
| Make it so Kitchens & Cabinets |
| For year ending December 31, 2022 |
| ASSETS | | |
| Current Assets | | |
| Cash | - | 1,042,900 |
| Acounts Receivable | - | 780,000 |
| Finished Inventory | - | 2,240,000 |
| Prepaid Insurance | - | 3,600 |
| Shop Supplies | - | 990,000 |
| Short Term Investments (6 - 12 mos.) | - | 750,000 |
| Total Current Assets | | 5,806,500 |
| - | - | - |
| Long-Term Assets | | |
| Long Term Investments (> 1 yr.) | | 1,400,000 |
| Land & Buildings | | 6,750,000 |
| Shop Machinery | 552,500 | |
| Less: Accumulated Depreciation | 144,000 | Total: 408,500 |
| Total Long-Term Assets | | 8,558,500 |
| TOTAL ASSETS | | 14,365,000 |
| - | - | - |
| LIABILITIES | | |
| Current Liabilities | | |
| Accounts Payable | 690,000 | |
| Commercial Paper | 810,000 | |
| Total Current Liabilities | 1,500,000 | |
| - | - | - |
| Long-Term Liabilities | | |
| Loans Payable | 540,000 | |
| Mortgage Payable | 3,100,000 | |
| Total Long-Term Liabilities | 3,640,000 | |
| TOTAL LIABILITIES | 5,140,000 | |
| - | - | - |
| STOCKHOLDER'S EQUITY | | |
| Common Stock | | 7,500,000 |
| Preferred Stock | | 1,750,000 |
| Retained Earnings (Fiscal 2022) | | 975,000 |
| TOTAL STOCKHOLDER'S EQUITY | | 10,225,000 |
| TOTAL LIABILITIES AND EQUITY | | 15,365,000 |
Stock Sale The company intends to sell its final 50,000 shares of common stock at $20/ share to raise capital for its purchase of the lumberyard (see Item \#10). They expect the issue to sell out within 60 days of being offered on May 2nd.75% of the purchases are expected to be made in the first month and the remaining purchases are expected to be made in June. The company chosen May as the launch date because the spring and summer are the times that are traditionally the highest revenue generating months. The issuance of stock does not result in the company being taxed on the funds it receives. Expenditures for the Coming Year The company is anticipating the following expenses: (a) rent for the downtown offices will increase by 5% on July 01,202 Y. Currently, the company pays $4,400 per month. (b) an increase of insurance premiums of 15% due to a claim in November, 202X brings the annual insurance fee to a total of $13,800. Insurance premiums are paid in full at the end of March each year. (c) renovations connected to the insurance claim amounting to $50,000 over the first 4 months of 202Y. (d) Property taxes owing to the City amount to 86,000 per year and they are paid at the end of June. (e) The commercial paper that the company issued December 15th,202X will be paid out at the end of year - including annual interest of 7%. (f) The company took out a $540,000 loan at the end of December 202X. The interest rate is 6% and it is expected the principal will be paid back over 5 years in equal monthly payments. Note: In the cash flow statement, show principal and interest payments on separate lines. (g) the mortgage is amortized over 25 years at 4% per annum. The payment is $15,000 per month. Assume that this amount consists of $7,500 in principal and $7,500 in interest. (h) the company intends to take advantage of an opportunity to make a balloon payment of $125,000 against its mortgage on April 15th,202Y. Tip: When calculating principal and interest and assigning them to the cash flow statement, be sure to assign them as an operating, investing, or financing item. Accounts Receivable Based on experience, Make It So Kitchens and Cabinets estimates that the collection of its Accounts Receivable in 202Y from sales made in 202X will follow the pattern outlined in the table below. Stock Sale The company intends to sell its final 50,000 shares of common stock at $20/ share to raise capital for its purchase of the lumberyard (see Item \#10). They expect the issue to sell out within 60 days of being offered on May 2nd.75% of the purchases are expected to be made in the first month and the remaining purchases are expected to be made in June. The company chosen May as the launch date because the spring and summer are the times that are traditionally the highest revenue generating months. The issuance of stock does not result in the company being taxed on the funds it receives. Expenditures for the Coming Year The company is anticipating the following expenses: (a) rent for the downtown offices will increase by 5% on July 01,202 Y. Currently, the company pays $4,400 per month. (b) an increase of insurance premiums of 15% due to a claim in November, 202X brings the annual insurance fee to a total of $13,800. Insurance premiums are paid in full at the end of March each year. (c) renovations connected to the insurance claim amounting to $50,000 over the first 4 months of 202Y. (d) Property taxes owing to the City amount to 86,000 per year and they are paid at the end of June. (e) The commercial paper that the company issued December 15th,202X will be paid out at the end of year - including annual interest of 7%. (f) The company took out a $540,000 loan at the end of December 202X. The interest rate is 6% and it is expected the principal will be paid back over 5 years in equal monthly payments. Note: In the cash flow statement, show principal and interest payments on separate lines. (g) the mortgage is amortized over 25 years at 4% per annum. The payment is $15,000 per month. Assume that this amount consists of $7,500 in principal and $7,500 in interest. (h) the company intends to take advantage of an opportunity to make a balloon payment of $125,000 against its mortgage on April 15th,202Y. Tip: When calculating principal and interest and assigning them to the cash flow statement, be sure to assign them as an operating, investing, or financing item. Accounts Receivable Based on experience, Make It So Kitchens and Cabinets estimates that the collection of its Accounts Receivable in 202Y from sales made in 202X will follow the pattern outlined in the table below
