Group California

1. How might Hynes and the investors use the profit plan in managing the business? The prepared profit plan contains sales, cost, and profit targets. The targets serve as guides to managing expenses and sales objectives. 2. How might the projected transactions impact the company’s balance sheet? The company has projected current assets over current liability ratio of 4.25 which means that the company is more than capable to pay its responsibilities. Also the company has an ROI of 4 years. 3. Prepare a profit plan in the form of an income statement for the first year of operations. Dispensers of California Inc
Income Statement
1st year operation RE 598,500.00

Expenses Incorp cost
2,500
re design
25,000
Interest payable
500
Manufacturing Payroll
145,000
Other manufacturing cost
62,000
Selling, general, and admin costs
63,000
Cost of sales
196,900
Eqpt depreciation
8500
Patent cost
20000
Cash dividends
5,000
Taxes
22,500

550,900

net income 47,600.00

4. Prepare a balance sheet as of the end of the 1st year of operations Dispensers of California Inc
Balance sheet
1st year of operation

Current assets Current Liabilities

Cash 208,500.00 AP AR - Bank loan 30,000.00
Inventory
15,100.00 Taxes Payable
22,500

223,600.00

52,500.00

Noncurrent assets Shareholder's equity

Equipment 85,000.00 Paid in cap 200,000.00
Less depriciation
8,500

Retained earnings 52,600.00 76,500.00 Less dividends 5,000.00

247,600.00

Total assets

Total liabilities and shareholder's equity 300,100.00

300,100.00

5. Hynes made a number of accounting decisions. Do you agree with these decisions? The accounting decisions that he made are: •