1. Using the information presented in Petite Shop "A" and this case prepare an estimated income statement and return on investment calculation for Petite Shop's first year of operation. Solution Looking at Petite Shop A details and calculations, I believe that the income statement should be as follows: Yearly costs are as follows: Petite Shop Pro-Forma Income Statement For First Year of Operations Gross Sales Market Shares (From Petite Shop A) 227,760 Less Cost of Goods Sold (58.4% of gross sales) 133,011 Gross Profit (Sales-GOGS) 94,749 Expenses: Wages 24,000 (2000 x 12) Rent 20,000 Taxes 550 Utilities 3,600 (300 x 12) Insurance 1,500 Depreciation 1,600 (8000 @ 20%) License etc. 100 Advertising 4,555 Miscellaneous 5,000 Interest 2,550 TOTAL EXPENSES 63 459 Net Income 31 290 a. Leasehold Improvements (20000-8000) 12,000 b. Start-up inventory (sales to inventory) = 5.7 To find the interest, we need to calculate startup and operation costs: - inventory level: = 227,760/5.7 20 0:7 QC al- r'o'l-ail hrirn