CASE STUDY AND QUESTIONS

We have the following financial information about the company from Jan 1, 2021- Dec 31st, 2021, which was the end of its first full year of operation. The company had $300,000 in sales of Product A in January 2021, and $200,000 in sales of Product B in March of 2021 The company incurred $360,000 in payroll-related expenses ($30,000/month) The company had $138,000 in the bank (cash) on Dec 31, 2021 On Dec 31, 2021, the company had $62,000 on their line of credit with their bank During the year, the company received cash payments of $150,000 in January, $90,000 in February, $82,000 in July and $60,000 in September During the year, the company paid out $50,000 to suppliers in July and $30,000 in December The company bought $120,000 in supplies ($10,000/month) The company had rent totalling $24,000 ($2000/month) During the year the company paid out $20,000/month in payroll costs (every month) During the year the company paid out $2,000/month in rent (every month) During the year the company received a $700 bill for heat and lights every month The company has a term loan at the bank for equipment of $40,000 From january-Novembery the company paid out $700/month for heat and lights (i.e., 11 months)

Using the information above, prepare the three main financial statements for the company for Calendar Year 2021

(20% for each of the three financial statements = 60%)

As of January 1st, 2022, the company had the following information about what the company expected for 2022 The company is anticipating $250,000 in sales of Product A in January, and $400,000 in sales of Product B in March The company expects to incur $30,000/month in payroll-related expenses The company expects to purchase $10,000/month in supplies The company knows it will have rent of $2,000/month The company will receive a $700 bill for heat and lights every month

Prepare a Proforma Income Statement for the company for Calendar Year 2022

(20% of test grade)

You intend to gather all the money you can yourself to start a company. For each of the listed sources of startup capital, indicate the following:

Whether it is debt, equity, or something else (not debt or equity)

The pros and cons of using this source of capital

(20% of test grade)

Source of capital	Debt/equity/something else	Pros/Advantages	Cons/Disadvantages
Personal savings
Personal credit card
2nd Mortgage on your house
Angel Investor wants a stake of your company
A family member offers to loan you money
Government grant for entrepreneurs (not repayable)
Venture capital
Bank loan for equipment
Supplier offer you products with no payment due for 30 days
Bank line of credit

Good answers please