Week8 - Assignment 3

How to finance your venture:

CALMAT Coffee

A. Initial fund
1. Remold and decoration: $5,000
2. Company setup fee: $5,000
3. Equipment and furniture: $30,000
4. Material: $10,000
6. Cash: $10,000
7. Total: $60,000

B. Business structure
1. Partnership(LLC or LLP): For individual or small group of people. Funding by individual.
2. S Corp: For individual or share holders under 100 investors. Funding by individual or sell stock or bond to investors.

3. C Corp: For individual or number of investors. Funding by individual, Sell stock or bond to investors.

S Corp is the best business structure for small business because S Corp is easy to transfer
ownership than Partnership and the profit pass to individual income tax unlike C Corp double
taxed.

We decide to form a S Corp. and company structure as follow:
1. $1 per share, issue 60000 shares
2. Share holder:
James Invests $15,000 holds 12,000 shares (20%)
Margareta Invests $15,000 holds 12,000 shares (20%)
Cristine Invests $15,000 holds 12,000 shares (20%)
Eddie Invests $15,000 holds 12,000 shares (20%)
Calmat Granted 12,000 shares (20%) (for royalty, and rent)


C. Option to finance the money;
1. Get money from the founder
2. Finance from the bank

ASSETS				LIABILITIES
Current Assets				Current Liabilities
	Cash	5,000		Accounts Payable		80,000
	Accounts Receivable	10,000		Wages Payable		5,000
	Store Inventory	100,000		Taxes Payable		2,000
	Total Current Assets	115,000		Total Current		87,000
				Liabilities
Long-Term Assets				Long-term (Noncurrent) Debts
	Store Equipment	30,000		Bank Debt		10,000
	less one year's			Total Liabilities		97,000
	Accumulated
	Depreciation	3,000
	Net Long-Term Assets	27,000		Owner's Equity
				Common Stock issued
				1,000 shares outstanding)		15,000
				Retained Earnings		30,000
				Total Owner's Equity		45,000
Total Assets		142,000				142,000

C. Initial balance sheet

ASSETS			LIABILITIES
	Cash	10,000		Accounts Payable	50,000
	Store Inventory	10,000
	Equipment	30,000
	Goodwill & Royalty	10,000
			Total Liabilities		50,000
			Owner's Equity		10,000
			Total Owner's Equity		10,000
TOTAL ASSETS		60,000	LIABILITIES & EQUITY		60,000

D. Business forecast:
1. First year:

Revenue $49,500
$3/cup x (2,000 1st quarter +3,200 2nd Q +4,800 3rd Q +6,500 4th Q)=$49,500

Cost $42,500
Material $16,500, Salary $20,000, Utilities $6,000, Others $2,000

Net $5,000

2. Second year:

Revenue $108,000
$3/cup x 3,000cups/month x12month = $108,000

Cost $ 92,600
Material $36,000, Salary $41,600, Utilities $10,000, Others $5,000

Net $ 15,400

3. Third year:

Revenue $144,000
$3 x 4,000 x 12 = $144,000

Cost $107,600
Material $48,000, Salary $41,600, Utilities $12,000, Others $6,000

Net $ 36,400