Part B$1(14$ marks$)$: $$In this assignment you are to construct an Income Statement, Balance Sheet and Cash Flow Statement for the DIY business outlined in the previous assignments.

The friend provides you the following assumptions and needs your help preparing the financial forecast statement.

$1.$ Assume that it is the current year

Or use $20$XX as a year.

$2.$ First year sales will total $$200,000.$

$3.$ Gross margins will be $50\%.$

$4.$ Operating margins will be $20\%.$

$5.$ Accounts Receivable will be $15\%$ of sales.

$6.$ Inventory will be $12\%$ of sales.

$7.$ Accounts Payable will be $5\%$ of sales.

$8.$ Accrued expenses payable will be $7\%$ of sales.

$9.$ The Bank will provide a loan of $$250,000.$ The annual interest will be $4\%,$ compounded annually.

Interest$-$only payments are needed $$ until the loan is due in $5$ years, where a balloon payment for the full balance must be paid.

$10.$ The combined federal and provincial tax rates will be $30\%.$

$11.$ Capital equipment purchases will be made at the start of the year.$$ These will total $$70,000.$ These will depreciate at $10\%$ per year.

$12.$ Your friend wants ending cash to be $$24,500,$ to have this amount on hand at year$-$end.

$13.$ Your friend will provide any other capital needed in the form of equity financing.