Preparation p2

The time had come that Lee had been waiting for and working towards but there was only one more thing to do before he could actually sell his first shares of the company, now that the board of directors was beginning to be formed (even though it was just his dad and him for now) he needed to start keeping track of the income and expenses of the company as well as the current stock on hand.

He had not quite started selling stocks in the company so he didn't have to keep track of that just yet.

He had actually been keeping track of sales under his Dad's nose but not the stock. So that covered income from the business but not expenses and stock on hand.

He knew that his dad payed for the stall that he used to store and sell the wares from but he didn't know how much that cost each month so he asked his Dad to give him record of how much each month he was spending towards that and each month thereafter to ask for a receipt each time he payed for the space per month.

Lee's Dad asked why he needed those records and Lee told him that it was to keep track of expenses for the company.

Lee's Dad also asked what else he needed towards that.

Lee let him know that he needed the amount spent towards the last few transactions buying stock for the company.

While Lee did attend the last 3 transactions he wasn't given any information on how much money was spent in each of the transactions.

There was one transaction that he was privy to and that included the amount to start buying pickles to be able to sell in the shop so he had already been able to record that transaction. but that transaction alone wasn't enough to cover all purchases of goods.

Since Lee had already been keeping track of sales for the company he knew a portion of what had been sold but didn't know the cost per unit or what would be the cost of goods sold. (COGS from now on.)

Lee also asked his Dad for the amount of cash available to the company.

He also would need wages paid to any employees that work for the company.

All of this information was important to build a financial statement for the company which boiled down to Assets=Liabilities+Owner's Equity.

He started out by counting the wares on hand (inventory from here on out) and figured out how much was bought of each thing in the last few transactions by asking his Dad.

doing this gave Lee the inventory and how much had been sold of each item.

His dad got him the amount of rent paid each month since Lee started working as well as cash available to the company at that current time as well as the last amounts spent in the last 3 transactions to buy goods and matched the goods bought up with the transactions. This included the pickles and already had the COGS for that.

Once he had everything in place he started on the Financial statement and got the information in the correct places.

he used sales and expenses to come up with the profit and loss as part of the financial statement.

Once he had the financial statement in place he could start showing it to potential people to get them interested in buying shares of stock.

All of this had to be done in preparation to be able to do so and basically take the company public.

Lee advised his Dad that they would need someone to help keep track of all of this in the future including the stock that was already sold to bring in money for the company.

His dad agreed and told Lee that he would have to train the person to be able to do just that.

Lee didn't put up any argument on that point and agreed to do so.

The next step was to get a board of directors in place so they could oversee the growth of the company, issue stock, and create a vision for the Corporation itself to be able to expand the business and add more businesses when the chance presented itself.

Over the next few months the Dad acted as President and owner of the corporation and set up his vision statement for the corporation.

Lee was acting secretary and helped guide his Dad in doing so.

They found someone they could trust to handle the physical place of business as well as someone else who they could trust to watch over the financial aspects of the business they also had someone who Lee did train to create the financial statement and gather all necessary information to be able to do so.

As stated earlier this was all preparing to be able to sell stock in the Corporation to be able to expand the Company.

Once that was done Lee could go out as a representative of the corporation and sell stocks.

So Lee started searching for people who would be interested in purchasing small pieces of the corporation.

At first it seemed a little rough to do so but he also had to prepare a presentation representing the company.

As he went around looking for people who were interested he formed the presentation and asked for feedback if someone didn't like the current presentation.

Once he got the presentation to where people were saying that they would buy into the company if they had the money to do so he started thinking about how much to sell the stock for in kind of an initial public offering.

What Lee didn't know is that the same King's aide was keeping track of him.

Lee and his dad sat down with the lawyer and the person who was watching over the finances of the corporation to figure out how much stock to sell in the corporation and Lee brought up the fact that he himself had been thinking about this very thing.

They came up with an amount on how much stock to sell and the initial price.

Once that was done Lee was able to start selling stocks representing the corporation.