12/31/17 Balance Sheet

Cash $17,000

                                   AccountsReceivable                          $12,000

                                   PrepaidInsurance                               $5,000

                                   Inventory                                            $15,000

Total $49,000

                                   Equipment                                          $100,000

                                   AccumulatedDepreciation                 $(20,000)

Total $80,000

                                   TotalAssets                                       $129,000

                                   AccountsPayable                               $9,000

                                   Income Taxes Payable $3,000

                                   TotalLiabilities                                   $12,000

                                   CommonStock                                  $100,000

                                   RetainedEarnings                              $17,000

                                   TotalEquity                                        $117,000

                                   Total Liabilities &Equity                   $129,000

Additional Information:

Sales for 2018 are expected to be $200,000.

Accounts Receivable turnover is expected to be 12 times - 30days of sales in accounts receivable out of a 360 day year (1/12 ofannual sales). This would be used to get ending accounts receivableon the 2018 balance sheet – day’s sales in accounts receivable isending accounts receivable divided by average sales (sales for 2018divided by 360 days). We can “back into” ending accountsreceivables once we have estimated sales. Note that the turnoverratio changes so the turnover ratio at the end of 2017 may havebeen different than that expected at the end of 2018.

Gross Margin ratio is expected to be 40 percent.

Inventory Turnover is expected to be 12 times - 30 days of costof sales in ending inventory out of a 360 day year (based upon costof goods sold and ending 2018 inventory). This would be used to getinventory on the 2018 balance sheet. See accounts receivable abovefor similar computations.

The cost of ending inventory is expected to be paid next month –ending accounts payable will be same as endinginventory.   Or, to state in another way, accountspayable turnover is same as the inventory turnover. The assumptionis that only inventory purchases flow through accounts payable –the assumption actually used by most manufacturing/merchandisingcompanies when prepared the statement of cash flows.

Equipment was purchased on 1/1/18 for $20,000. Equipment has afive year life, no salvage value, and is depreciated using thestraight-line method. The old equipment is being depreciated on thesame basis.

Salaries are expected to be $2,000 per month. It is expectedthat one-half month will be owed on 12/31/18 because of when paydayfalls.

$30,000 in cash was borrowed on 12/31/18 by issuing a NotePayable.

Insurance costing $18,000 was purchased on 6/1/18 (the same timein which the policy purchased in 2017 expired - the new policy wasfor 12 months).

The tax rate is 30 percent. Income taxes for the current yearare payable during the first two months of the next year.

Dividends of $2,000 were paid during 2018.

I've started the income statement, just want to make sure I'm onthe right track to keep on going.

I need an income statement, statement of retained earnings,balance sheet(12/31/17 & 12/31/18) and statement of cash flow(direct method)