Question: Scenario: Your team has been hired to provide financial analysis for a start-up company, Bobble in Style, which produces customized bobble heads. The bobble heads are made out of less rigid materials and are more true to life than those of competitors. The company inventors, Mr. and Mrs. Lee, are going to pitch their idea to Shark Tank in a few months, but first they need to have a better understanding of the business financials. The Lee's are already creating and selling their product from their home-based office and work area. They know what costs are involved with making the bobble heads on a small scale, but they don't have an understanding of financial figures beyond basic costs. They need you to make sense of various financial figures for them. 1. Financial Statements: Develop an Income Statement, Cash Flow Statement, and Balance Sheet based on the provided data for year 20XX (the previous year) that follows. Explain the purpose of each financial statement.
a. Income Statement Data for 20XX: · Gross Sales = $33,291 · Coupons and Discounts = $549 · Cost of Goods = $10,276 · Labor = $0 (Mr. and Mr. Lee were the only ones working and did not pay themselves) · advertising fees =$2000 · bank fees = $120 · phone/internet = $1200 · shipping = $1380 · utilities = $900 · office supplies = $785 · Income tax = 26 %
b. Cash Flow Statement Data for 20XX: · Cash in bank = $21,120 · Depreciation = $800 · Proceeds from disposal of investment = $3,000 · Capital Expenditure = -$1,600 · Repayment of Bank Loan = -$5,000 · Interest Expense Associated with Bank Loan = -$345 · Consider any data relevant from the income statement.
c. Balance Sheet Data for 20XX:
Cash = $21,120
Accounts Receivable = $496
Accounts Payable = $200
Inventory = $10,507
Accumulated Depreciation = -$1,000
Common Stock = $0