Pro-Forma Assumptions 2008 Sales Growth COGS % of Sales 40% 55% Increase in Wages $300,000 Increase in Rent Expense 20% Marketing & Advertising % of Sales 3.5% Inventory Days for 90 Loan for Patio $1,060,000 Interest Rate on Loan for Patio Interest Rate for All Other Loans Tax Rate Other Income Day Sales Outstanding Minimum Cash % of Sales 9% 16% 23% $0 1.3 0.40% Pro-Forma Income Statement Net sales Cost of goods sold $ 12,127,828 $ 6,670,305 Gross profit $ 5,457,522 Operating expenses: Administrative expenses $ 343,454 Amortization $ 324,946 Insurance $ 61,032 Marketing & advertising $ 424,474 Miscellaneous $ 264,009 Rent $ 623,887 Repairs & maintenance $ 417,819 Security $ 193,281 Supplies & expenses $ 247,142 Telephone $ 199,752 Travel & entertainment $ 92,252 Utilities $ 74,214 Vehicle expenses $ 86,834 Wages $ 1,221,768 Total operating expenses $ 4,574,862 Operating income $ 882,660 $ Other income Interest expense $ 612,751.68 Net income (loss) $ 269,908 Interest expense $ 612.751.68 Net income (loss) 269,908 Additional comments: How do you calculate interest expense?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Pro-Forma
Assumptions
2008 Sales Growth
COGS % of Sales
40%
55%
Increase in Wages
$300,000
Increase in Rent Expense
20%
Marketing & Advertising % of Sales
3.5%
Inventory Days for
90
Loan for Patio
$1,060,000
Interest Rate on Loan for Patio
Interest Rate for All Other Loans
Tax Rate
Other Income
Day Sales Outstanding
Minimum Cash % of Sales
9%
16%
23%
$0
1.3
0.40%
Pro-Forma Income Statement
Net sales
Cost of goods sold
$ 12,127,828
$ 6,670,305
Gross profit
$ 5,457,522
Operating expenses:
Administrative expenses
$
343,454
Amortization
$ 324,946
Insurance
$
61,032
Marketing & advertising
$
424,474
Miscellaneous
$
264,009
Rent
$
623,887
Repairs & maintenance
$
417,819
Security
$ 193,281
Supplies & expenses
$
247,142
Telephone
$
199,752
Travel & entertainment
$
92,252
Utilities
$
74,214
Vehicle expenses
$
86,834
Wages
$ 1,221,768
Total operating expenses
$ 4,574,862
Operating income
$ 882,660
$
Other income
Interest expense
$ 612,751.68
Net income (loss)
$
269,908
Interest expense $ 612.751.68 Net
income (loss) 269,908
Additional comments: How do you
calculate interest expense?
Transcribed Image Text:Pro-Forma Assumptions 2008 Sales Growth COGS % of Sales 40% 55% Increase in Wages $300,000 Increase in Rent Expense 20% Marketing & Advertising % of Sales 3.5% Inventory Days for 90 Loan for Patio $1,060,000 Interest Rate on Loan for Patio Interest Rate for All Other Loans Tax Rate Other Income Day Sales Outstanding Minimum Cash % of Sales 9% 16% 23% $0 1.3 0.40% Pro-Forma Income Statement Net sales Cost of goods sold $ 12,127,828 $ 6,670,305 Gross profit $ 5,457,522 Operating expenses: Administrative expenses $ 343,454 Amortization $ 324,946 Insurance $ 61,032 Marketing & advertising $ 424,474 Miscellaneous $ 264,009 Rent $ 623,887 Repairs & maintenance $ 417,819 Security $ 193,281 Supplies & expenses $ 247,142 Telephone $ 199,752 Travel & entertainment $ 92,252 Utilities $ 74,214 Vehicle expenses $ 86,834 Wages $ 1,221,768 Total operating expenses $ 4,574,862 Operating income $ 882,660 $ Other income Interest expense $ 612,751.68 Net income (loss) $ 269,908 Interest expense $ 612.751.68 Net income (loss) 269,908 Additional comments: How do you calculate interest expense?
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