Reference no: EM13833236

For 5 years you have owned and operated a small company, ABC Desks, that designs and manufactures high-end custom wooden desks. The business is incorporated and pays state and federal taxes separate from your personal income. You and your staff do all the work onsite at your shop, which is in Fairfax, Virginia. Business has been excellent. Last year you sold 150 desks generating $350,000 in gross revenue, which was up 10% over the previous year. You estimate your business will grow 10% annually this year and continue that growth for the next 3 years. The major expenses before taxes for your business last year included $100,000 for labor, $30,000 for raw materials, $10,000 for insurance and utilities, $25,000 for rent, $5,000 for advertising and marketing, and $10,000 for miscellaneous supplies and other non-depreciable expenses. You paid $50,000 for tools, office furniture and shop equipment that you purchased with money you had saved up when you started the business 5 years earlier. The tools and equipment depreciate over 7 years using MACRS. Last year you bought a truck that cost $50,000 to haul raw materials, finished desks, etc., financing it with a 4 year bank loan at 8% interest for $40,000. You paid the remaining $10,000, from your company cash account as a down payment. 1. Develop an Income Statement and a Cash Flow Statement for your business reflecting the past year, current year, and projecting forward two more years. Take into account taxes and depreciation.