Homework 3 - Balance Sheet

Ice Cream Business

Instructions:
Create the balance sheet for the ice cream business based on below transactions

Year 1 transactions

1 We incorporated Ice Cream LLC at the beginning of Year 1, deposited $75,000 and issu
2 We rented 2 ice cream stands for $5,000/year each for 12 months
3 At the end of month 6, we purchased an ice cream stand for $35000 and we expect it t
4 At the start of the year, we purchased an inventory of ice creams of 6,000 units, at $2
5 We ran an advertising campaign on a local radio for $500
6 We sold our all our ice cream at $10 per ice cream
7 In June, we bought a research report about real estate development in our neighborho
8 We hired a lawyer in July for $2,500 because one of the customer sued us
9 At the beginning of July, we borrowed $10,000 from the bank at 10% annual interest r
10 In July, we purchase a used car for $10,000 to handle our daily transportation, we expe
11 In September, we issued additional 35 shares to our friend for $25,000 (par value 0)
12 In October, we deposited our own $50,000 into the company's bank account and issue
13 In November, the company hired an assistant to investigate the real estate market for
14 In December, the company hired a specialist for $3,000/month to look into the better

*Assume all transactions are cash transaction unless specified otherwise

below transactions

posited $75,000 and issued 100 shares to ourselves (par value is 0)

35000 and we expect it to last 4 years

ms of 6,000 units, at $2 per ice cream

pment in our neighborhood for $1000

mer sued us
at 10% annual interest rate, the loan has to be repaid in 3 years semi-annually
y transportation, we expect the car to last 5 years
$25,000 (par value 0)
s bank account and issued additional 50 shares to ourselves (par value 0)
he real estate market for $1500 per month
h to look into the better ice cream production (compared to what we are selling now)

otherwise
Homework 3 - Balance Sheet

Income Statement Year 1 Balance Sheet

Revenue 60,000
Cost of Goods Sold 26,375
Gross Profit 33,625
SG&A 4,000
R&D 3,000
Operating profit 26,625
Interest expense 500
Other non-operating expenses 4,000
Income before tax 22,125
Tax expense 6,638
Net income 15,488

Gross Profit Margin 56%

Operating Profit Margin 44%

EBITDA
Operating profit 26,625
Depreciation cost of the stand for year 1 4,375
Depreciation cost of the car for year 1 1,000
EBITDA 32,000

EPS 125

Income Statement Assumptions Year 1 Balance Sheet Assumptions

Revenue
Ice cream units sold 6,000
Ice cream price per unit 10

Cost of Goods Sold

Ice cream units purchased 6,000
 Ice cream cost per unit 2
Cost of ice creams 12,000

Ice cream stand rent 5,000

# stands rented 2
Ice cream stand rent cost 10,000

The purchase cost of the stand 35,000

Useful life of the stand 4
Annual depreciation cost of the stand 8,750
Depreciation cost of the stand for year 1 4,375

SG&A
Advertising costs 500
Lawyer cost (incident) 2,500

The purchase cost of the car 10,000

Useful life of the car 5
Annual depreciation cost of the car 2,000
Depreciation cost of the car for year 1 1,000

R&D
Specialist salary 3,000

Interest expense
Loan amount 10,000
Interest rate 10%
Annual interest expense 1,000
Interest expense for year 1 500

Other non-operating expenses

Research report 1,000
Assistant salary 3,000

Tax expense
Income before tax 22,125
Tax rate 30%
Tax expense 6,638

EPS
Month 1 100
Month 2 100
Month 3 100
Month 4 100
Month 5 100
Month 6 100
Month 7 100
Month 8 100
Month 9 135
Month 10 185
Month 11 185
Month 12 185
Total 1,490
Weighted average shares outstanding 124
EPS 125
Balance Sheet Year 1

Balance Sheet Assumptions Year 1