- Prepare both the pro forma income statement and the pro forma balance sheet for Sparky.
- What is the amount of a loan that Frank will need from the bank?
- Assume that the bank says Frank can have the money and would like to work with him on the type of debt that he will be incurring. The bank says he can have it as a line of credit (see footnote) at 5% interest, a short-term loan of two years at 7% interest, or a five-year loan at 10% interest, or a combination of these types of loans. What would you suggest and why? And remember that since Frank is a sole proprietor, he does not get a paycheck but is instead pay from the profits of the store, which also has to be used to pay back the loan.
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