# Dont want you to solve the question but I have so much time inbetween these finance classes I never remember how to do an income statement anymore.

#### runn0010

##### New member
• It is January 1st, 2014 and Oscar D’Souza has decided to start a new business. He wants to forecast the first year’s Income Statement and Balance sheet. He believes the assumptions below are reasonable – and wants you to assist him by creating the forecasted statements. You agree. Please construct an Income Statement and Balance Sheet from the information provided below. (25 points)

• First year sales will total $100,000 • Gross margins will be 50% • Operating margins will be 20% • Accounts Receivables will be about 15% of sales • Inventory will be 12% of sales • Accounts Payable will be 5% of sales • Accrued expenses payable will be 7% of sales • The Bank of Connecticut will provide a loan of$30,000. The annual interest will be 8%, compounded annually. Interest only payments are needed – until the loan is due in 5 years, where a balloon payment for the full balance must be paid.
• The combined federal and provincial tax rates will be 30%
• Capital equipment purchases will be made at the start of the year. These will total $35,000. These will depreciate at 10% per year • D’Souza wants ending cash to be$24,500; he feels he needs this on hand at year-end
• D’Souza will provide any other capital needed in the form of equity financing

So my question is Gross Margin is 50% of sales Im assuming so my cost of goods sold would be the difference. Is that what you guys get out of this question?

Yes.