Your goal is to complete the following for your first year of operations:

• A 12-month cash budget
• A forecasted income statement for your first year
• A forecasted balance sheet as of the end of your first year

For this last activity, you will not be using the information youve collected in your first two activities. Rather, you will use the information given below to complete this last assignment.

As you prepare your cash budget, forecasted income statement, and forecasted balance sheet, make the following assumptions regarding your first year of business:

• You will begin your cookie company on January 1
• You will begin your cookie company with a $2,000 loan. Assume this is your starting cash balance.
  • Assume an interest rate of 1% per month on this loan.
  • Assume you need to pay cash interest each month on the loan balance outstanding as of the beginning of the month
  • Assume once your company has a Preliminary Cash Balance of $4,000 or more for a particular month, it will pay off the $2,000 loan balance in full that month
• You will have initial start-up costs that you will pay for at the beginning of January. These are 1-time costs that include the following:
  • Commercial Oven = $1,000
  • Laptop = $300
  • Implements (pans, bowls, mixers, etc.) = $200
• Assume the cookies you are making are very large chocolate chip cookies. Therefore, you only sell these cookies individually.

• The total cost of making one very large cookie = $10
  • Direct Materials/cookie = $4
  • Direct Labor/cookie = $4
  • Overhead/cookie = $2
• Your selling price = $20
• Assume you forecast to sell 100 cookies in January and you forecast to sell 25 more cookies than the previous month throughout your first year. (Example: 125 cookies in February, 150 cookies in March, 175 cookies in April, etc.)
  • Assume your maximum capacity for making cookies each month is 300. Therefore, that is the most you can make and sell in a month. Keep this in mind for your sales forecasts in the later months of the year.
• Assume you sell all of the cookies you make in a month
• Assume 80% of your sales are for cash and 20% are on credit
  • Your credit customers always pay you in full in the following month
• Assume you pay for all of your direct materials on credit, and you pay for direct materials purchases in the following month
  • Example: In January you estimate making 300 cookies at a $4 direct labor cost per cookie. Therefore the cash you pay for direct materials in January is $0, and $1,200 in February
• Assume you pay your direct labor in cash during the month the cookies were made
  • Example: In January you estimate making 300 cookies at a $4 direct labor cost per cookie. Therefore the cash you pay for direct labor in January is $1,200
• Assume you rent a kitchen space with a fixed monthly cost of $400
• Assume a monthly fixed advertising fee of $200
• Assume a monthly internet hosting fee of $50
• Assume no returns or refunds of product.
• When you make your forecasted balance sheet, assume $600 depreciation on your equipment

\begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|c|c|} \hline & JAN & FEB & MAR & APR & MAY & JUN & JUL & AUG & SEP & OCT & NOV & DEC \\ \hline Beginning Cash Balance & $2,000 & $2,000 & $4,400 & $7,300 & $10,700 & $14,600 & $19,000 & $23,900 & $29,300 & $35,200 & $41,200 & $47,200 \\ \hline \multicolumn{13}{|l|}{ Less: Initial Start-Up Costs } \\ \hline Cash Balance After Start-Up Costs & 2,000 & & & & & & & & & & & \\ \hline Add: Cash Receipts from Customers & & 2,400 & 2,900 & 3,400 & 3,900 & 4,400 & 4,900 & 5,400 & 5,900 & 6,000 & 6,000 & 6,000 \\ \hline Total Cash Available & 2,000 & 4,400 & 7,300 & 10,700 & 14,600 & 19,000 & 23,900 & 29,300 & 35,200 & 41,200 & 47,200 & 53,200 \\ \hline \multicolumn{13}{|l|}{ Less: Cash Payments } \\ \hline \multicolumn{13}{|l|}{ Direct Materials } \\ \hline \multicolumn{13}{|l|}{ Direct Labor } \\ \hline \multirow{2}{*}{\multicolumn{13}{|c|}{\begin{tabular}{l} Kitchen Rent \\ IIterest un barik Luan (I\% ol veg. ol muntn \end{tabular}}} \\ \hline & & & & & & & & & & & & \\ \hline \multicolumn{13}{|l|}{ Advertising } \\ \hline \multicolumn{13}{|l|}{ Internet } \\ \hline Total Cash Payments & 0 & 0 & 0 & 0 & 0 & 0 & 0 & 0 & 0 & 0 & 0 & 0 \\ \hline Preliminary Cash Balance & 2,000 & 4,400 & 7,300 & 10,700 & 14,600 & 19,000 & 23,900 & 29,300 & 35,200 & 41,200 & 47,200 & 53,200 \\ \hline \multicolumn{13}{|l|}{ Loan Activity } \\ \hline \multicolumn{13}{|l|}{ Additional Loan From Bank } \\ \hline \multicolumn{13}{|l|}{ Repayment of Loan From Bank } \\ \hline Ending Cash Balance & $2,000 & $4,400 & $7,300 & $10,700 & $14,600 & $19,000 & $23,900 & $29,300 & $35,200 & $41,200 & $47,200 & $53,200 \\ \hline Loan Balance at Month End & $2,000 & $2,000 & $2,000 & $2,000 & $2,000 & $2,000 & $2,000 & $2,000 & $2,000 & $2,000 & $2,000 & $2,000 \\ \hline \end{tabular} \begin{tabular}{|c|c|c|} \hline \multicolumn{3}{|c|}{ Forecasted Income Statement } \\ \hline \multicolumn{3}{|c|}{ As of December 31,20XX} \\ \hline Sales & & \\ \hline \multicolumn{3}{|l|}{ Cost of Goods Sold } \\ \hline Gross Profit & $ & - \\ \hline \multicolumn{3}{|l|}{ Operating Expenses } \\ \hline Interest Expense & $ & - \\ \hline Advertising Expense & $ & - \\ \hline Internet Expense & $ & - \\ \hline Total Operating Expenses & $ & - \\ \hline Net Income & $ & - \\ \hline \end{tabular} \begin{tabular}{|c|c|c|} \hline \multicolumn{3}{|c|}{ Forecasted Balance Sheet } \\ \hline \multicolumn{3}{|c|}{ As of December 31,20XX} \\ \hline \multicolumn{3}{|l|}{ ASSETS } \\ \hline \multicolumn{3}{|l|}{ Cash } \\ \hline \multicolumn{3}{|l|}{ Accounts Receivable } \\ \hline Total Current Assets & \multicolumn{2}{|l|}{$} \\ \hline \multicolumn{3}{|l|}{ Fixed Assets } \\ \hline \multicolumn{3}{|l|}{ Equipment } \\ \hline Less: Depreciation & $ & 600 \\ \hline Total Fixed Assets & $ & (600) \\ \hline Total Assets & $ & (600) \\ \hline \multicolumn{3}{|l|}{ LIABILITIES } \\ \hline \multicolumn{3}{|l|}{ Accounts Payable } \\ \hline \multicolumn{3}{|l|}{ Total Liabilities } \\ \hline \multicolumn{3}{|l|}{ Equity } \\ \hline Owner's Capital & $ & - \\ \hline Total Liabilities \& Equity & $ & \\ \hline \end{tabular}