Question

CC1-1 Financial Statements for a Business Plan (LO2, LO3] Nicole Mackisey is thinking of forming her own spa business, Nicole's Getaway Spa (NGS). Nicole expects that she and two family members will each contribute $5,000 to the business and receive 500 shares each. Nicole forecasts the following amounts for the first year of operations, ending December 31, 2017. cash on hand and in the bank, $3,690: amounts due from customers from spa treatments, $2.220, building and equipment, $89,360: amounts owed to beauty supply outlets for spa equipment, 55,450, notes payable to a local bank, $72760. Cash dividends of $1,000 will be paid to the shareholders during the year. Nicole also forecasts that first-year sales revenues will be $68,500, wages will be $41100, the cost of supplies used up will be $11,600, selling and administrative expenses will be $11,000, and income taxes will be $2.740 Required: 1. Based on Nicole's estimates, prepare a forecasted) income statement for Nicole's Getaway Spa for the year ended December 31, 2017 NICOLE'S GETAWAY SPA Income Statement (forecasted) For the Year Ended December 31, 2017 Expenses Total expenses 2. Prepare a forecasted statement of retained earnings for Nicole's Getaway Spa for the year ended December 31, 2017 NICOLE'S GETAWAY SPA Statement of Retained Earnings (forecasted) For the Year Ended December 31, 2017 Retained earnings, January 1, 2017 Retained earings, December 31, 2017

Answer 1

$68,500 NICOLE'S GATEWAY SPA Income Statement (Forecasted) For The Year Ended December 31st, 2017 Sales revenue Expenses Wages expense $41,100 Supplies expense $11,600 Administrative expense $11,000 lincome taxes $2,740 Total expenses Net Income $66,440 $2,060 2 NICOLE'S GATEWAY SPA Statement of Retained Earnings (Forecasted) For The Year Ended December 31st, 2017 Retained Earnings, January 2017 Add: Net Income during the year Less: Dividend Retained Earnings, December 2017 $0 $2,060 -$1,000 $1,060 3 NICOLE'S GATEWAY SPA Balance Sheet (forecasted) At December 31, 2017 Assets Cash Accounts Receivable Buildings and Equipment Total Assets Liabilities and Shareholders' Equity Liabilities Accounts payable Note payable Total Liabilities $3,690 $2,2201 $88,360 $94,270 $5,450 $72,7601 $78,210 Shareholders' Equity Common Stock Retained Earnings Total Shareholders' Equity Total Liabilities and Shareholders' Equity $15,000 $1,060 $16,060 $94,270 4 Creditors