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s may be made m in cash on the las It pays interest of I percent per month t, the company desires to maintain a $6.000 cash cushion. Prep h. Prepare i. Prepare a pro forma balance sheet at the end of the quarter j. Prepare a pro forma statement of cash flows for the quarter a pro forma income statement for the quarter MUNICATE 1 Preparing and using pro forma statements ATC 14- Business Applications Case faria Gutierrez and Devin Duzan recently graduated from the same university. After graduati decided not to see n they business hop- s operated k jobs at established organizations but, rather, to start their own small g they could have more flexibility in their personal lives for a few years. Maria's family Mexican restaurants and taco trucks for the past two generations, and Maria no truck services in the town where their university was located. To reduce the amount they for an initial investment, they decided to start a business operating a taco cart rather thana from which they would cook and serve traditional Mexican-styled street food taurants and taco trucks for the past two generations, and Maria noticed there were would need taco truck, They bought a used taco cart for $15,000. This cost, along with the cost for supplies to get started, a business license, and street vendor license brought their initial expenditures to $20,000 They took $5,000 from personal savings they had accumulated by working part time during college, and they borrowed $15,000 from Maria's parents. They agreed to pay interest on the outstanding loan balance each month based on an annual rate of 4 percent. They will repay the principal over the nex few years as cash becomes available. They were able to reni sasse in a parking lot near the campus Food as an alternative to the typical they had attended, believing that the students would wele fast food that was currently available. After two months in business, September and Octebes, they had average monthly revenues of $20,000 and out-of-pocket costs of $16,000 for rent, ingredients, paper supplies, and so on, but not interest. Devin thinks they should repay some of the money they borrowed, but Maria thinks they should prepare a set of forecasted financial statements for their first year in business before decid ing whether or not to repay any principal on the loan. She remembers a bit about budgeting from a survey of accounting course she took and thinks the results from their first two months in busine can be extended over the next 10 months to prepare the budget they need. They estimate the cart will last at least five years, after which they expect to sell it for $5,000 and move on to something in their lives. Maria agrees to prepare a forecasted (pro forma) income statement, balance sheet, and statement of cash flows for their first year in business, which includes the two months already passed

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