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    The Garden Place

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    Pratyush Barua
    Mary Jane Bowers decided to open a retail garden store called Garden Place, Inc. in Lynchburg, Virginia after leaving her job in a large city. She incorporated the business and invested $100,000 along with her partner John. Garden Place took out loans totaling $42,000 from Campbell National Bank to purchase equipment and inventory. Mary Jane projected the store's sales, expenses, payroll, and loan payments for the first year of operations ending March 31, 2007. She estimated $340,000 in cash sales, $60,000 in sales on account, and expenses including $20,000 in advertising and $112,000 in payroll.

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    The Garden Place

    Uploaded by

    Pratyush Barua
    159 views1 page
    Mary Jane Bowers decided to open a retail garden store called Garden Place, Inc. in Lynchburg, Virginia after leaving her job in a large city. She incorporated the business and invested $100,000 along with her partner John. Garden Place took out loans totaling $42,000 from Campbell National Bank to purchase equipment and inventory. Mary Jane projected the store's sales, expenses, payroll, and loan payments for the first year of operations ending March 31, 2007. She estimated $340,000 in cash sales, $60,000 in sales on account, and expenses including $20,000 in advertising and $112,000 in payroll.

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    Mary Jane Bowers decided to open a retail garden store called Garden Place, Inc. in Lynchburg, Virginia after leaving her job in a large city. She incorporated the business and invested $100,000 along with her partner John. Garden Place took out loans totaling $42,000 from Campbell National Bank to purchase equipment and inventory. Mary Jane projected the store's sales, expenses, payroll, and loan payments for the first year of operations ending March 31, 2007. She estimated $340,000 in cash sales, $60,000 in sales on account, and expenses including $20,000 in advertising and $112,000 in payroll.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    159 views1 page

    The Garden Place

    Uploaded by

    Pratyush Barua
    Mary Jane Bowers decided to open a retail garden store called Garden Place, Inc. in Lynchburg, Virginia after leaving her job in a large city. She incorporated the business and invested $100,000 along with her partner John. Garden Place took out loans totaling $42,000 from Campbell National Bank to purchase equipment and inventory. Mary Jane projected the store's sales, expenses, payroll, and loan payments for the first year of operations ending March 31, 2007. She estimated $340,000 in cash sales, $60,000 in sales on account, and expenses including $20,000 in advertising and $112,000 in payroll.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

    Garden Place, Inc.

    In January 2006, Mary Jane Bowers was reviewing her plans for the April 1 opening of a garden center in
    Lynchburg, Virginia. She had selected Lynchburg as the town for a new home, after deciding to leave the
    large, northern city where she had both worked for the past 10 years. Bowers had a degree in horticulture
    and had worked for a large chemical company in its agricultural-herbicide division. Along with the
    decision to move, Bowers decided to change her work status as well. She wanted to devote her working
    days to something she enjoyed and was passionate about. Thus, she decided to go into business for
    herself, starting a retail garden store selling plants, trees, and shrubs

    Bowers accumulated information on upscale retail garden stores from a number of sources, talked to
    suppliers, looked at potential locations, and established a banking relationship with the Campbell National
    Bank. She wanted to make sure that she had enough money to get the business off to a good start. Mary
    Jane had heard stories about many small businesses that failed because they were undercapitalized.

    After careful study and analysis, Mary Jane made the following projections for the first year of operations
    of the Garden Place, Inc.:

    1. April 1, 2006 – The business would be incorporated, and Mary Jane and John would invest
    $100,000 in the company in exchange for shares of common stock.
    2. April 1, 2006 – The Campbell National Bank would loan Garden Place, Inc.: $32,000 to be repaid
    in equal principal payments over four years. The interest rate was 13%, and interest was payable
    at the end of each year when the principal payment was made.
    3. April 1, 2006 – A pickup truck would be purchased for $12,000, of which $10,000 would be
    financed by the Campbell National Bank. The loan would be repaid over three years at the rate of
    $4,033 per annum (which includes $700 interest per annum) for a total of $12,100.
    4. April 1, 2006 – Display equipment would be purchased for $6,000 cash.
    5. April 1, 2006 – A Rototiller would be purchased for $400 cash.
    6. April 1, 2006 – A cash register would be purchased for $3,600 cash.
    7. April 1, 2006 – An inventory of plants, trees, and shrubs would be purchased for $60,000 cash.
    8. Additional purchase of plants, trees, and shrubs: $200,000 for cash.
    9. The following things were projected to occur between April 1, 2006, and March 31, 2007:
    Cash sales: $340,000
    Sales on account: $60,000
    Mary Jane planned to price all items to give her a 40% gross margin, which is to say that if an
    item cost $6, it would be sold for $10.
    10. Advertising expenses would be a percentage of sales, or $20,000 for the year.
    11. Mary Jane categorized a group of business expenses as ongoing. They were forecast as follows:
    Rent: $7,200 ($600 per month)
    Telephone: $1,200 ($100 per month)
    Utilities: $4,800 ($400 per month)
    Payroll: $112,000 ($40,000 for Mary Jane and $72,000 for three
    Regular and four part-time employees)

    12. Monthly payments of $336 would be made on the $10,000 truck loan.
    13. A principal payment of $8,000 would be made on the $32,000 bank loan, along with interest of
    $4,160.
    All the expenses and installments would be paid before 31 st March, 2007.The estimated life of truck,
    display equipment, rototiller, and cash register is 5 years.

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