home work need calculations.
Case Assumptions
Space and Light Studios (because it is a small service business that operates on cash transactions) is on a cash accounting basis.
Use the following assumed amounts as starting balances when the business was acquired: $12,000 initial investment by owners to start the business, purchase of yoga mats and equipment for $2,000, no debt, and annual supplies of $500.
Procedure
Using the Financial Statement Templates, create an Excel sheet based on 3-year financial statements (income, balance sheet, capital budget, and cash flow) from one of the scenarios (most probable) youve decided to use. Building the income statement and other financial statements will require that you make estimates on the non-direct operating costs, salaries of owners, tax rates and other elements. Annotate your assumptions. (Note: You will need to remove any information from the spreadsheet, reformat it as necessary, and replace it with your own.)
Your final scenario and assumptions for financing (debt or equity) must be reflected in your ending balance sheets and cash flow.
Write a one-page conclusion to your Excel sheet and specifically state:
your assessment of the future viability of the business
the top three changes that you believe need to be made to the studio
whether the Studio would benefit by going to an accrual accounting basis for their financial statements
what would be leading indicators (not lagging) the owner should monitor that would give them an indication that the future business will go well.
use number from case stuy 3 pt 1 for variable costs and revenue
