Day 27: The Business Loan

For the food truck and catering company, we need to borrow $90,300. We plan to pay it back in seven years at seven percent interest. We need to calculate the monthly payments and see how much of the payment goes to pay off the principal amount and how much is interest. If you search on line you can find a number of loan amoritization calculators. I found one that uses Excel. The link is below:

Loan amoritization calculator

I have already filled in the amounts for our catering business loan. as you can see the payment amount is the same each month - $1.362.87 but the amount applied toward paying off the principal varies each month as does the interest part of the payment.

Month	Monthly Payment	Principal	Interest
1	$1,362.86	$836.12	$526.75
1	$1,362.86	$841.00	$521.97
1	$1,362.86	$845.90	$516.97

Our completed balance sheet reflects the loan in the Note Payable Account.

Inside Slider Food Truck and Catering Company

Balance Sheet

Current Date

ASSETS
Cash	10,000.00
Food Truck	85,000.00
Acc. Depreciation Food Truck	0.00
Uniforms	500.00
Furniture and Fixtures	1,650.00
Acc. Depreciation Furniture	0.00
Paper Supplies	250.00
Permits & Licenses	300.00
Office Equipment	500.00
Acc. Dep. Office Equipment	0.00
Prepaid Insurance	0.00
Merchandise Inventory	1,500.00
Other Assets	600.00
Total Assets	100,300.00
LIABILITIES
Notes Payable	90,300.00
Accounts Payable
Workers' Comp Payable
Federal Income Tax Payable
FICA Tax Payable
Medicare Tax Payable
Federal Unemployment Tax Payable
State Unemployment Tax Payable
Sales Tax Payable
SDI Tax Payable
State Income Tax Payable
State Employment Training Tax
Total Liabilities
STOCKHOLDERS' EQUITY
Common Stock	10,000.00
Retained Earnings
Total Liabil & Stock. Equity	100,300.00

Our total assets should equal our total liabilities plus stockholders equity (100,300 = 90,300 + 10,000)

Day 28: Inside Slider Income Statement

The income statement show sales of our sliders and other menu items as well as cost of goods sold section and a section detailing all of the expenses needed to sell our product. We will use the income statement that shows the sale of merchandise. Our merchandise is composed of all of the ingredients necessary to make our menu items. It includes, ground beef, pork, chicken, buns, baked beans, onions, etc. A sample of our income statement is shown below. Curretly thee are no numbers in the statement. We explain each expense

Inside Slider Food Truck and Catering Company

Income Statement

For the period ending Current Date

REVENUE
Sales
Other Income
Total Revenue
COST OF MERCHANDISE SOLD
Beginning Inventory
Purchases
Total cost of merchandise available for sale
Less: Ending Inventory
Cost of Good Sold
Gross Profit
EXPENSES
Salary Expense
Repairs Expense
Advertising Expense
Supplies Expense
Depreciation Expense
Insurance Expense
Miscellaneous Expense
Payroll Taxes Expense
Legal And Accounting
Utilities Expense
Web/Internet Expenses
Interest Expense
Delivery Expense
Total Expenses
Net Profit

Day 29: Projected Salary Expense and Payroll Taxes Expense

Click On the Link below to see the payroll information for the Inside Slider Company.
Inside Slider Payroll

Examining the numbers show what the salary projections are for this company. A projected income statement must be submitted as part of the business plan proposal.

Job Title Yearly Pay Pay Rate Hours Worked Monthly Pay

Owner/Truck Mgr $65,000 $33.85 160 $5416.67

window person $20,000 $10.41 160 $1,666.67

Caterer/Cook $38,400 $20 160 $3,200

Kitchen Worker $18,400 $9.35 160 $1,500

The total monthly salary expense is $11,783

The table below shows the payroll taxes for Inside Slider for this month. These taxes must be paid on a regular basis to the IRS and Franchise Tax Boards.

Tax	Percent	Amount
FICA/Social Security	.062	$730.57
Medicare	.0145	170.85
FUTA	.008	$94.27
SUTA	.034	$400.63
Total Payroll Taxes	.1185	$1,396.33

Look at the projected income statement below to see the placement of these amounts relating to salary. They are underlined.

Inside Slider Food Truck and Catering Company

Income Statement

For the period ending Current Date

REVENUE
Sales	00.00
Catering Income	00.00
Total Revenue	00.00
COST OF MERCHANDISE SOLD
Beginning Inventory
Purchases
Total cost of merchandise available for sale
Less: Ending Inventory
Cost of Good Sold
Gross Profit
EXPENSES
Salary Expense	$11,783.00
Repairs Expense	$1,000.00
Advertising Expense	$100.00
Fuel Expense	$500.00
Depreciation Expense	$762.49
Insurance Expense	$300.00
Miscellaneous Expense	$100.00
Payroll Taxes Expense	$1,396.33
Legal And Accounting	00.00
Utilities Expense	$100.00
Web Internet Expenses	$20.00
Interest Expense	$526.75
Propane Expense	$100.00
Total Expenses	$16,688.57
Net Profit

Day 29: Other Projected Expenses

We need to project other expenses at this time. How much propane will we use? gasoline for the generator? Insurance for the food truck, gas and oil and maintenance on the truck, equipment repairs? amount spent on advertising? You will need to do some research on these expenses. In some cases you will find that these expenses are listed as a percentage of sales. We do not know this amount yet, so you might have to come back and do this a little later. Some of these expenses are listed on the income statement form above.

Repairs expense: $1,000
Propane/supplies expense: $100
Insurance expense: $300
Misc. expense: $100
Phone: 100
Webite expense: $20
Fuel expense: $500
Interest on Loan :$526.75
Depreciation expense: $762.49

Depreciation expense is a way of expensing out the cost of assets and goes toward reducing your taxable income. The truck costs 85,000. Depreciated over 10 years using a straight line method and divided by 12 equal amounts equals 708.33 per month. Furniture and fixtures are valued at $1,650 depreciated over 3 years = $550 per year or $45.83 per month. The office equipment depreciated in a straight line method over 3 years equals $8.33 per month. Therefore the total depreciation for our business is $762.49 per month

Day 30 Cost of Good Sold

The cost of goods sold for retail establishments selling food and beverages is about 74% according to BizStats.com. It ranges from 50%-75% food and labor to prepare the items. The food truck industry is a little different as far as cost of goods sold is concerned. It is somewhat less than the brick and motar restaurants. There are no property taxes, rent, dishes to wash, tables to clear, customers to seat, and other expenses associated with the traditional restaurant. According to my research cost of goods sold or cost of sales is about 35%. This number is confirmed looking at the markup on each item on our menu. The 35% also includes the amount of labor needed to prepare our food.

Day 31 Break Even Anlysis

Our break even point calculated using the formula that appears below. Simply put, subtract your cost of sales percentage from 100%. Then divide your fixed expenses by this number. This number is your break even sales number. We also need to see how many invividual sales this represents.

Break Even = total fixed expenses/((100-total variable percentage/100))

Break even = 17,525/((100-35/100))

Break even = 17,525/.65

Break even = 26,961.54

Our income statement does not include the $836 payment on the principal of the debt. This accounts for the difference between 17,525 on the break even analysis and 16,688.57 total expenses on the income statement.

We calculated from doing research that an average food truck sale equals $12.40. If we divide our $26,961 by $12.40 we come up with 2,174 sales per month. We are open 22 days per month so we can calculate that we need about 98 sales each day to break even.

Inside Slider's Break Even Analysis

Tutorial:Starting your own business

Week 6

Day 29: Projected Salary Expense and Payroll Taxes Expense

Day 29: Other Projected Expenses

Job Title	Yearly Pay	Pay Rate	Hours Worked	Monthly Pay
Owner/Truck Mgr	$65,000	$33.85	160	$5416.67
window person	$20,000	$10.41	160	$1,666.67
Caterer/Cook	$38,400	$20	160	$3,200
Kitchen Worker	$18,400	$9.35	160	$1,500