You are an owner of a lemonade stand, "2 Fresh, LLC." Today you sold all your inventory to thirsty customers and took in a total of $200. Your sugar, lemons, cups, water, and all materials that went into the cups of lemonade cost you $100. You charged the same amount for each cup of lemonade (all cups were the same size, same price, etc.). You agreed to pay a friend $25 to run the stand for 8 hours; you will pay them at the end of the month. You spent $10 copying posters for advertising. You still owe your Dad $5 to rent the driveway where you set up the table (you will pay him in a couple of days). You bought the table yesterday at a garage sale for $10. At the same garage sale, you spent another $3 on paper cups (which are now gone) and $2 for an old pitcher to hold the lemonade (which you will re-use). At the start of today, you had $240 in your bank account, no inventory, and no other equipment or materials. The $240 was carried over from last year. Assume that today was the one and only day that you will run your lemonade stand this fiscal year (you run on a normal calendar year). Last year, you decided to make your lemonade stand a corporation. You are now an LLC under Nebraska law and you successfully filed for an S-corp election shortly after. You are required by the IRS to send Schedule K-1 forms each year only to yourself and your friend Jim. Your other friend Tim has agreed in principle to buy your business for $700, but you haven’t finalized the sale yet.

1. **How much were your COGS? Show your work.**

\[ COGS = \$100 + \$25 + \$10 + \$5 = \$140 \]

2. **What was your gross profit and your gross profit margin? Show your work.**

\[ Gross\ Profit = \$200 - \$140 = \$60 \]

\[ Gross\ Profit\ Margin = \left( \frac{\$60}{\$200} \right) \times 100\% = 30\% \]

3. **What was your net profit and your net profit margin? Show your work.**

\[ Net\ Profit = \$60 - \$10 - \$3 = \$47 \]

\[ Net\ Profit\ Margin = \left( \frac{\$47}{\$200} \right) \times 100\% = 23.5\% \]

4. **Create a basic income statement for your lemonade stand for this fiscal year.**

**Income Statement**
```
Revenue: $200
Cost of Goods Sold (COGS): $140
Gross Profit: $60
Expenses:
Advertising: $10
Supplies (paper cups): $3
Total Expenses: $13
Net Profit: $47
```

5. **Create a basic statement of cash flows for your lemonade stand for January 1 of this year up through today.**

**Statement of Cash Flows**
```
Cash Flow from Operating Activities:
Revenue from sales: $200
Payments for inventory and supplies: -$100
Payment for labor: -$25
Advertising expenses: -$10
Rent (owed): -$5
Net Cash Flow from Operating Activities: $60

Cash Flow from Investing Activities:
Purchase of table: -$10
Purchase of pitcher: -$2
Net Cash Flow from Investing Activities: -$12

Cash Flow from Financing Activities:
None
Net Cash Flow from Financing Activities: $0

Net Increase in Cash: $48
```

6. **Create a basic balance sheet for your lemonade stand today. If applicable, be sure to list all known current assets, fixed assets, intangible assets, current liabilities, long-term liabilities, stockholder’s equity.**

**Balance Sheet**
```
Assets:
Current Assets:
Cash: $288 ($240 + $48)
Fixed Assets:
Table: $10
Pitcher: $2
Total Assets: $300

Liabilities:
Current Liabilities:
Rent Owed: $5
Wages Payable: $25
Total Liabilities: $30

Stockholder’s Equity:
Retained Earnings: $270 ($240 + $47 - $25 - $2)
Total Liabilities and Stockholder’s Equity: $300
```

7. **Who is/are the shareholder(s) of the lemonade stand and how did you determine this?**

The shareholders of the lemonade stand are you and your friend Jim. This is determined by the information that you are required by the IRS to send Schedule K-1 forms each year to yourself and Jim.

8. **Who are some of the possible stakeholders of the lemonade stand and why?**

Possible stakeholders include:
- **You**: As the owner and primary investor in the lemonade stand.
- **Jim**: As a shareholder.
- **Your friend**: Who is paid to run the stand.
- **Your Dad**: Who rents the driveway space.
- **Customers**: Who buy the lemonade and influence the business's success.
- **Suppliers**: Who provide the sugar, lemons, cups, and other materials.
- **IRS**: As the regulatory authority that requires tax forms and compliance.