Reference no: EM131219559

Use the infomration provided below to the determine;

1. A balance sheet

2. An income statement

3. A cashflow statement either direct or indirect

>The chiness goverment would waive all taxes for the first 5 years and donate the land use for the first 10 years.

> Cost of building the facility, $2,000,000

> Machinery and equipment costs, $3,000,000

> Training and other set-up cost, $500,000

After shake-down, from discussion with marketing, maufacturing and accounting people, he estimated the following on an annual basis:

> Sales, $15,000,000 with apporximately 20% outstanding in receivable at the end of the year.

> Source material purchases. $8,000,000, of which, $1,500,000 will be unpaid at year end.

> Variable cost of goods manufacutred, (100% sourced materials) 50% of sales.

> Fixed cost of goods maufactured excluding depreciation charges for plant and equipment, $ 2,500,000, (all of which will be paid by year end).

Variable distribution costs, 15% ( all of which will be paid by year end).

> Administrative cost, $500,000, ( all of which will be paid by end year).

> No inventory finished goods is expected.

> Development budget is set at $1,000,000 to adapt the product mix to local demands.

> Tax account has noted that the building can be depreciated over 10 years, and the equipment over 3 years.

> Tax account has noted that due to the uncertainty of future benefit, accounting rules that state that the training and other start-up cost should be written off.

> Historically, bad debts in th area of the golbe are approximately 2% of sales.