Reference no: EM13880395

Nicole Mackisey is thinking of forming her own spa business, Nicole's Getaway Spa (NGS). Nicole expects that she and two family members will each contribute $ 10,000 to the business and receive 1,000 shares each. Nicole forecasts the following amounts for the first year of operations, ending December 31, 2015: Cash on hand and in the bank, $ 2,150; amounts due from customers from spa treatments, $ 1,780; building and equipment, $ 70,000; amounts owed to beauty supply outlets for spa equipment, $ 4,660; notes payable to a local bank for $ 38,870. Cash dividends of $ 2,000 will be paid to the stockholders during the year. Nicole also forecasts that first- year sales revenues will be $ 40,000; wages will be $ 24,000; the cost of supplies used up will be $ 7,000; office expenses will be $ 5,000; and income taxes will be $ 1,600.

Required:

1. Based on Nicole's estimates, prepare a (forecasted) income statement for Nicole's Getaway Spa for the year ended December 31, 2015.

2. Prepare a (forecasted) statement of retained earnings for Nicole's Getaway Spa for the year ended December 31, 2015.

3. Prepare a (forecasted) balance sheet for Nicole's Getaway Spa at December 31, 2015.

4. As of December 31, 2015, would most of the financing for assets come from creditors or stockholders?