The Martins know that setting

The Martins know that setting up some projected Income Statements are important. They need to look at what the first year of operations might look like and if possible they will need to look at the years thereafter to get an impression of what the long term might look like.

RM Purchases: $132,000* (Raw Material Purchases is a part of COGS)

Sales Salaries: 80,000

Advertising: 3,000

Travel: 2,000

Revenue: 360,000

Financing Costs: 10,000

Office Lease: 13,000

Depreciation: 38,000

Income Taxes: 22,000

Admin Salary: 40,000

A second financial statement that is key to understanding a business is the Balance Sheet. The Martins have estimated the following accounts to be a part of their initial Balance Sheet.

Trade Receivables: $35,000

Cash: 15,000

Short Term Loan: 30,000

Share Capital: 100,000

Long Term Liabilities: 60,000

Property, Plant: 170,000

Prepaid Expenses: 5,000

Yearly LTD Retirement: 5,000

Retained Earnings: 25,000

Accumulated Dep’n: 38,000

Current Payables: 17,000

Inventories: 50,000

Q1: With the above accounts, prepare CompuTech’s Income Statement for the year ended, December 31, 2021.

Q2: With the above accounts, prepare CompuTech’s Balance Sheet as at December 31, 2021.

Q3: Which of the above accounts are FIXED, and which are VARIABLE?

Q4: What is the COGS for the year 2021?

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