Youve just started a business that makes lava lamps. The cost of goods sold for each lamp is $11 and

you sell them for $20 each. You start the company on December 31st, 2021. At that time, you have

enough inventory to make 700 lamps, you have $8,000 of cash on hand. You begin by making them in

your garage. You purchased equipment used to make the lamps for $40,000 which have no salvage

value and will depreciated evenly over 5 years. To finance your assets, you take out a $45,000 loan

which will be due on December 31st, 2024. The entire principal value will be due on that date, and you

will need to make an interest payment of 8% of the principal value on December 31st, 2022, onDecember 31st, 2023, and pay off the principal plus the interest payment on December 3st, 2024. The portion of assets not financed with debt will come from an equity investment from you.

1st year activities

During the 1st year of business, you sold 3,000 lamps. At the end of the year, you have enough inventoryon hand to build 850 lamps. You began purchasing on credit near the end of the year and have $4,000in accounts payable at the end of the year. You allowed one customer to purchase on credit and have accounts receivable of $2,000 at the end of the year. You paid yourself a salary of $6,000 during theyear. The companys income tax rate is 15%.

2nd year activities

The production of the lamps has overwhelmed your garage and has taken over a portion of your house.

To maintain familial harmony, you rent space at $1,000 per month to build your shelters. This will begin on January 1st, 2023. You also purchase $30,000 in equipment on January 1st, 2023, which will also be evenly depreciation over the next five years with no salvage value.You sold 6,500 units during the year. You once again paid yourself a $6,000 salary and took $10,000 in dividends during the year. At the end of the year you had $2,500 in accounts receivable and $4,400 in accounts payable. You have enough inventory on hand to make 1,000 lamps. You owe your landlord$800 for the previous months rent. The companys income tax rate is 15%.

3rd year activities

During the third year, your sales jump to 15,000 units. You increased your pay to $50,000 per year and

the company owed you $20,000 of that at the end of the year. You have enough inventory to produce

3,000 units at the end of the year. Once again, you owe your landlord $800 at the end of the year and

your rent amount remained at $800 per month. Accounts Receivable were $5,000 at the end of the year

and accounts payable were $6,000. You pay off the $45,000 loan on December 30th, 2024. The companys income tax rate is 15%. You pay yourself $25,000 in dividends during the year

COMPLETE THE FINANCIAL STATEMENT FOR YEARS 2022, 2023, and 2024

INCOME STATEMENT

Net sales

Cost of goods sold

gross profit

selling, general, and administrative expenses

rent expense

depreciation expense

earnings before interest and taxes

interest expense

earnings before taxes

income tax

net income

dividends paid

addition to retained earnings

FOR 2022, 2023, 2024

THANK YOU