His friends offered to invest in a new corporation with a $2,00,000 capitalization.Creator of a new and improved commercial paint spray.The incorporation cost was $2,500
Cost of equipment to be used in assembling the paint spray dispensers was $85,000
Short term loan from local bank was $30,000.
Manufacturing payroll was $145,000
Other manufacturing cost was $62,000
The sales done was $598,500
Depreciation cost was $8,500 but Hynes estimated the useful life of equipment to be 10 years.
The partnership was formed by Mr. and Mrs. Henry Antoine and Mrs. Sandra Landers, who had become acquainted while working in a Portland, Oregon, restaurant. On November 1, 2009, each of the three partners contributed $16,000 cash to the partnership and agreed to share in the profits proportionally to their contributed capital (i.e., one-third each). The Antoine's’ contribution represented practically all of their saving. Mrs. Landers’ payment was the proceeds of her late husband’s insurance policy.
It is a case study of Kim Fuller, who was working in a large chemical firm as a District Sales Engineer HE learned that company had developed use for the recycled material in pulverized form.
Although there is a possibility of both profit and loss, We have seen profit.
Please see rest of the details in following slides.
The partnership was formed by Mr. and Mrs. Henry Antoine and Mrs. Sandra Landers, who had become acquainted while working in a Portland, Oregon, restaurant. On November 1, 2009, each of the three partners contributed $16,000 cash to the partnership and agreed to share in the profits proportionally to their contributed capital (i.e., one-third each). The Antoine's’ contribution represented practically all of their saving. Mrs. Landers’ payment was the proceeds of her late husband’s insurance policy.
It is a case study of Kim Fuller, who was working in a large chemical firm as a District Sales Engineer HE learned that company had developed use for the recycled material in pulverized form.
Although there is a possibility of both profit and loss, We have seen profit.
Please see rest of the details in following slides.
This is the case study of the subject Managerial Accounting. It deals with the Break Even point. The analysis is basically on the break -even analysis for the multiple products. We have done the full analysis and the solution is in the presentation.
University of Phoenix Faculty MaterialFinancial Prospectus Expec.docxdickonsondorris
University of Phoenix Faculty Material
Financial Prospectus Expectations
Prepare a 1,950- to 2,500-word paper with the following components of a financial prospectus for your venture. The Financial Prospectus must include the information you provided in the Venture Concepts Paper and Venture Budgeting and Forecasting Paper.
The information from your previous assignments must be revised, as necessary, based on material covered in this class.
Organize your prospectus into the following order:
1. Description of Venture
2. Development Concept
3. Management Biographies
4. Competitive Product or Service Statement (Market Analysis)
5. Construction and Preopening Budget
6. Operating Pro-Forma (Budget)
7. Samples of Financial Statements to be Used
8. Summary of Proposed Investment Terms
9. Return on Investment Analysis
10. Statement of the Viability of the Venture as an Investment
An explanation of each component of the prospectus may be found in the description of terms below.
Description of Terms
1. Description of Venture
a. An introductory illustration of the venture, with an overview of the brand and the product or service to be offered
b. Details of the product or service are covered in item 4.
2. Development Concept
a. The description focuses on components that must be built or created to support the venture.
b. Include the components of any physical structure, equipment, or anything that requires development investment.
3. Management Biographies
a. Use one page or less to describe the background of each of the principle owners.
b. If this venture requires special technical expertise, include the biographies of whoever is going to bring this needed expertise to the organization.
4. Competitive Product or Service Statement
a. A market analysis to show how this venture’s product or service competes with similar products or services in its market
b. Include how the product or service may be produced efficiently by this venture to achieve targeted profit margins.
5. Construction and Preopening Budget
a. The budget in the virtual organization, Kudler Foods, may be used as a model for this portion.
b. Include all of the costs associated with getting the venture to the point of performing its first sale. The budget, however, must include enough working capital to pay for its operations until the net profits may cover these expenses.
6. Operating Pro-Forma
a. The operating budget for the first 12 months that this venture will be operating after startup and training periods
b. If the venture requires phased operations when it first opens, these first few months need not be included in the pro-forma so that the pro-forma may illustrate a typical 12-month period as a new venture.
7. Samples of Financial Statements to be Used
a. An inventory of the financial statements that will be used to measure the performance of the venture, using data from the pro-forma
b. Include an Income Statement, Balance Sheet, and any other financial statemen ...
This is the case study of the subject Managerial Accounting. It deals with the Break Even point. The analysis is basically on the break -even analysis for the multiple products. We have done the full analysis and the solution is in the presentation.
University of Phoenix Faculty MaterialFinancial Prospectus Expec.docxdickonsondorris
University of Phoenix Faculty Material
Financial Prospectus Expectations
Prepare a 1,950- to 2,500-word paper with the following components of a financial prospectus for your venture. The Financial Prospectus must include the information you provided in the Venture Concepts Paper and Venture Budgeting and Forecasting Paper.
The information from your previous assignments must be revised, as necessary, based on material covered in this class.
Organize your prospectus into the following order:
1. Description of Venture
2. Development Concept
3. Management Biographies
4. Competitive Product or Service Statement (Market Analysis)
5. Construction and Preopening Budget
6. Operating Pro-Forma (Budget)
7. Samples of Financial Statements to be Used
8. Summary of Proposed Investment Terms
9. Return on Investment Analysis
10. Statement of the Viability of the Venture as an Investment
An explanation of each component of the prospectus may be found in the description of terms below.
Description of Terms
1. Description of Venture
a. An introductory illustration of the venture, with an overview of the brand and the product or service to be offered
b. Details of the product or service are covered in item 4.
2. Development Concept
a. The description focuses on components that must be built or created to support the venture.
b. Include the components of any physical structure, equipment, or anything that requires development investment.
3. Management Biographies
a. Use one page or less to describe the background of each of the principle owners.
b. If this venture requires special technical expertise, include the biographies of whoever is going to bring this needed expertise to the organization.
4. Competitive Product or Service Statement
a. A market analysis to show how this venture’s product or service competes with similar products or services in its market
b. Include how the product or service may be produced efficiently by this venture to achieve targeted profit margins.
5. Construction and Preopening Budget
a. The budget in the virtual organization, Kudler Foods, may be used as a model for this portion.
b. Include all of the costs associated with getting the venture to the point of performing its first sale. The budget, however, must include enough working capital to pay for its operations until the net profits may cover these expenses.
6. Operating Pro-Forma
a. The operating budget for the first 12 months that this venture will be operating after startup and training periods
b. If the venture requires phased operations when it first opens, these first few months need not be included in the pro-forma so that the pro-forma may illustrate a typical 12-month period as a new venture.
7. Samples of Financial Statements to be Used
a. An inventory of the financial statements that will be used to measure the performance of the venture, using data from the pro-forma
b. Include an Income Statement, Balance Sheet, and any other financial statemen ...
CFO Insight For Business Owners: How to Utilize Financial StatementsChase R. Morrison
CFO Insight: This is a primer on how to use financial statements to more effectively operate a privately held business and was used to educate new entrepreneurs at the Valley Economic Development Corporation in Sherman Oaks, CA.
Chapter 9 Exercise 31. Liquidity ratios. Edison, Stagg, and Thor.docxchristinemaritza
Chapter 9 Exercise 3
1. Liquidity ratios. Edison, Stagg, and Thornton have the following financial information at the close of business on July 10:
Edison
Stagg
Thornton
Cash
$4,000
$2,500
$1,000
Short-Term Investments
3,000
2,500
2,000
Accounts Receivable
2,000
2,500
3,000
Inventory
1,000
2,500
4,000
Prepaid Expenses
800
800
800
Accounts Payable
200
200
200
Notes Payable: Short-Term
3,100
3,100
3,100
Accrued Payables
300
300
300
Long-Term Liabilities
3,800
3,800
3,800
a. Compute the current and quick ratios for each of the three companies. (Round calculations to two decimal places.) Which firm is the most liquid? Why?
b. Suppose Thornton is using FIFO for inventory valuation and Edison is using LIFO. Comment on the comparability of information between these two companies.
c. If all short-term notes payable are due on July 11 at 8 a.m., comment on each company's ability to settle its obligation in a timely manner.
Chapter 9 Exercise 4
1. Computation and evaluation of activity ratios. The following data relate to Alaska Products Inc.:
20X5
20X4
Net Credit Sales
$832,000
$760,000
Cost of Goods Sold
440,000
350,000
Cash, Dec. 31
125,000
110,000
Accounts Receivable, Dec. 31
180,000
140,000
Inventory, Dec. 31
70,000
50,000
Accounts Payable, Dec. 31
115,000
108,000
2. The company is planning to borrow $300,000 via a 90-day bank loan to cover short-term operating needs.
a. Compute the accounts-receivable and inventory-turnover ratios for 20X5. Alaska rounds all calculations to two decimal places.
b. Study the ratios from part (a) and comment on the company's ability to repay a bank loan in 90 days.
c. Suppose that Alaska's major line of business involves the processing and distribution of fresh and frozen fish throughout the United States. Do you have any concerns about the company's inventory-turnover ratio? Briefly discuss.
Chapter 9 Problem 1
1. Horizontal and vertical analysis. The following financial statements pertain to Waterloo Corporation:
WATERLOO CORPORATION
Comparative Balance Sheets
December 31,20X5 and 20X4
20X5
20X4
Assets
Current Assets
Cash
$ 11,250
$ 12,500
Accounts Receivable (net)
18,500
25,000
Inventories
38,500
35,000
Prepaid Expense
__3,750
__3,750
Total Current Assets
$ 72,000
$ 76,250
Property, Plant, and Equipment
Buildings (net)
$ 102,750
$ 101,250
Equipment (net)
28,500
30,000
Vehicles (net)
32,000
40,000
Total Property, Plant, and Equipment
$ 163,250
$ 171,250
Trademarks (net)
__$ 14,750
__$ 2,500
Total assets
$ 250,000
$ 250,000
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable
$ 49,000
$ 70,000
Notes Payable
13,500
40,000
Federal Taxes Payable
__2,500
__25,000
Total Current Liabilities
$ 65,000
$ 135,000
Long-Term Debt
__$ 50,000
__$ 25,000
Total Liabilities
$ 115,000
$ 160,000
Stockholders' Equity
Common Stock, $10 par
$ 25,000
$ 25,000
Retained Earnings
__110,000
__65,000
Total Stockholders' Equity
$ 135,000
$ 90,000
Total Liabilities a ...
ACC205 Discussion QuestionsAccounting Equation As you hav.docxannetnash8266
ACC205 Discussion Questions:
Accounting Equation
As you have learned in this week’s readings the Accounting Equation is Assets = Liabilities + Owners’ Equity. Is the accounting equation true in all instances? Provide sample transactions from your own experiences to demonstrate the validity of the Accounting Equation.
Accounts
What does the term account mean? What are the different classifications of accounts? How do the rules for debits and credits impact accounts? Please provide an example of how debits and credits impact accounts.
Accounting Cycle
Financial statements are a product of the accounting cycle. Think about two different companies: a manufacturing company, and a retail company. Why would different companies have different accounting cycles? Would you expect the steps of the accounting cycle to be the same for each company? Why or why not?
Bank Reconciliation
What is the purpose of a bank reconciliation? What are the reasons for differences between the cash reported in the accounting records and the cash balance in the bank statements?
LIFO vs. FIFO
The controller of Sagehen Enterprises believes that the company should switch from the LIFO method to the FIFO method. The controller’s bonus is based on the next income. It is the controller’s belief that the switch in inventory methods would increase the net income of the company. What are the differences between the LIFO and FIFO methods?
Depreciation
A variety of depreciation methods are used to allocate the cost of an asset to all of the accounting periods benefited by the use of the asset. Your client has just purchased a piece of equipment for $100,000. Explain the concept of depreciation. Which of the following depreciation methods would you recommend: straight-line depreciation, double declining balance method, or an alternative method?
Ratios
Ratios provide the users of financial statements with a great deal of information about the entity. Do ratios tell the whole story? How could liquidity ratios be used by investors to determine whether or not to invest in a company?
Profit Margin
Year Ending December 2012
Year Ending December 2011
Year Ending December 2010
Revenues
40,000
35,000
33,000
Operating Expenses
Salaries
15,000
10,000
9,000
Maintenance and Repairs
6,000
9,000
10,000
Rental Expense
2,500
2,500
2,500
Depreciation
2,000
2,000
2,000
Fuel
4,000
3,500
2,500
Total Operating Expenses
29,500
27,000
26,000
Operating Income
10,500
8,000
7,000
Sales and Administrative Expenses
6,000
4,000
3,000
Interest Expense
2,500
2,000
1,000
Net Income
2,000
2,000
3,000
Above is a comparative income statement for Cecil, Inc. for the years 2010, 2011, and 2012. Calculate the profit margin for each of these years. Comment on the profit margin trend.
BWeek Five Exercise Assignment
Financial Ratios
1. Liquidity ratios. Edison, Stagg, and Thornton have the following financial information at the close of business on July 10:
Edi.
Measuring, Projecting, and Evaluating New Venture Financial PerformanceTim R. Holcomb, Ph.D.
"Measuring, Projecting, and Evaluating New Venture Performance" provides an overview of financial concepts for new ventures, including calculating operating cash flow, pro forma financial statements, and key financial ratios
Personality is defined as the characteristic sets of behaviors, cognition's, and emotional patterns that evolve from biological and environmental factors. While there is no generally agreed upon definition of personality, most theories focus on motivation and psychological interactions with one's environment.
The study of personality can be said to have its origins in the fundamental idea that people are distinguished by their characteristic individual patterns of behavior the distinctive ways in which they walk, talk, furnish their living quarters, or express their urges.
What is Merger?
A merger is a combination of two or more companies which forms a new legal entity under the banner of one corporate name.
What is Acquisition?
Acquisition essentially means ‘to acquire’ or ‘to takeover’. Here a bigger company will take over the shares and assets of the smaller company.
The research explores and develops a brand image of yoga. Study was conducted on the age group of people between 18-30 years. A total of two studies were undergone on 43 respondents: focus group and in-depth interviews. This will help in identifying the key factors in terms of development of brand image of yoga.
This book presents e-marketing planning and marketing mix tactics from a strategic and tactical perspective. Part 1 begins with the setting the context for market planning. Part 2 discusses legal and global environments. Part 3 begins the e-marketing strategy discussion in depth, and part 4 continues with marketing mix and customer relationship management strategy and implementation issues.
E- Marketing Strategies
A marketing strategy refers to a business' overall game plan for reaching prospective consumers and turning them into customers of the products or services the business provides.
Marketing strategy is a process that can allow an organization to concentrate its limited resources on the greatest opportunities to increase sales and achieve a sustainable competitive advantage. A marketing strategy should be centered on the key concept that customer satisfaction is the main goal. Fulfillment of wants of the prospects is one the important goals of marketing activities.
A marketing strategy refers to a business' overall game plan for reaching prospective consumers and turning them into customers of the products or services the business provides.
Marketing strategy is a process that can allow an organization to concentrate its limited resources on the greatest opportunities to increase sales and achieve a sustainable competitive advantage. A marketing strategy should be centered on the key concept that customer satisfaction is the main goal. Fulfillment of wants of the prospects is one the important goals of marketing activities.
Personality is defined as the characteristic sets of behaviors, cognitions, and emotional patterns that evolve from biological and environmental factors. While there is no generally agreed upon definition of personality, most theories focus on motivation and psychological interactions with one's environment.
The study of personality can be said to have its origins in the fundamental idea that people are distinguished by their characteristic individual patterns of behavior the distinctive ways in which they walk, talk, furnish their living quarters, or express their urges.
Q1. What could Vijay have done differently to avoid some of the problems he was now facing?
Q2. What type of layout should Vijay adopt in the new facility and why?
Q3. Can Vijay do both customized and standard furniture operation under one organization structure?
Q4. How does the task of customized operation differ from standard operation?
Q5. Identify the major factors influencing furniture business given in above case?
Q6. Is it possible for Vijay to operate in both customized and standard furniture market? If yes, how and what are the challenges? If no, why and give reasons?
Q7. Can Vijay sustain and survive for longer period in this situation?
Government of Gujarat wants to increase the capacity of dams on Sadamata and Lokmata rivers but with this proposal the temple of Bhavnath, which was located in projected reservoir has to be submerged, and the native people were adamant in their demand to save the temple. Now government of Gujarat has to make sure that while they implement the project, religious sentiments have to be safeguarded so that project should be implemented smoothly. For that government of Gujarat has proposed to the people of villages that all the requirement will be taken into the consideration and utmost care will be taken to ensure that the temple’s future is safeguarded.
This is only for educational purpose and information has been compromised.
Customer satisfaction is a marketing term that measures how products or services supplied by a company meet or surpass a customer's expectation. Customer satisfaction is important because it provides marketers and business owners with a metric that they can use to manage and improve their businesses.
WhatsApp Messenger is a proprietary, cross-platform instant messaging service for smartphones without having to pay for SMS.
Customer satisfaction is a marketing term that measures how products or services supplied by a company meet or surpass a customer's expectation. Customer satisfaction is important because it provides marketers and business owners with a metric that they can use to manage and improve their businesses.
Whats App Messenger is a proprietary, cross-platform instant messaging service for smartphones. In addition to text messaging, users can send each other images, video, and audio media messages. In addition to text messaging, users can send each other images, video, and audio media messages. The client software is available for Android, BlackBerry OS, BlackBerry 10, iOS, Nokia-Series 40, Symbian (S60), and Windows Phone.
Customer satisfaction is a marketing term that measures how products or services supplied by a company meet or surpass a customer's expectation. Customer satisfaction is important because it provides marketers and business owners with a metric that they can use to manage and improve their businesses.
You can find the further details in slides
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For more information, visit-www.vavaclasses.com
How to Create Map Views in the Odoo 17 ERPCeline George
The map views are useful for providing a geographical representation of data. They allow users to visualize and analyze the data in a more intuitive manner.
Read| The latest issue of The Challenger is here! We are thrilled to announce that our school paper has qualified for the NATIONAL SCHOOLS PRESS CONFERENCE (NSPC) 2024. Thank you for your unwavering support and trust. Dive into the stories that made us stand out!
How to Split Bills in the Odoo 17 POS ModuleCeline George
Bills have a main role in point of sale procedure. It will help to track sales, handling payments and giving receipts to customers. Bill splitting also has an important role in POS. For example, If some friends come together for dinner and if they want to divide the bill then it is possible by POS bill splitting. This slide will show how to split bills in odoo 17 POS.
We all have good and bad thoughts from time to time and situation to situation. We are bombarded daily with spiraling thoughts(both negative and positive) creating all-consuming feel , making us difficult to manage with associated suffering. Good thoughts are like our Mob Signal (Positive thought) amidst noise(negative thought) in the atmosphere. Negative thoughts like noise outweigh positive thoughts. These thoughts often create unwanted confusion, trouble, stress and frustration in our mind as well as chaos in our physical world. Negative thoughts are also known as “distorted thinking”.
The Roman Empire A Historical Colossus.pdfkaushalkr1407
The Roman Empire, a vast and enduring power, stands as one of history's most remarkable civilizations, leaving an indelible imprint on the world. It emerged from the Roman Republic, transitioning into an imperial powerhouse under the leadership of Augustus Caesar in 27 BCE. This transformation marked the beginning of an era defined by unprecedented territorial expansion, architectural marvels, and profound cultural influence.
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The Indian economy is classified into different sectors to simplify the analysis and understanding of economic activities. For Class 10, it's essential to grasp the sectors of the Indian economy, understand their characteristics, and recognize their importance. This guide will provide detailed notes on the Sectors of the Indian Economy Class 10, using specific long-tail keywords to enhance comprehension.
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This is a presentation by Dada Robert in a Your Skill Boost masterclass organised by the Excellence Foundation for South Sudan (EFSS) on Saturday, the 25th and Sunday, the 26th of May 2024.
He discussed the concept of quality improvement, emphasizing its applicability to various aspects of life, including personal, project, and program improvements. He defined quality as doing the right thing at the right time in the right way to achieve the best possible results and discussed the concept of the "gap" between what we know and what we do, and how this gap represents the areas we need to improve. He explained the scientific approach to quality improvement, which involves systematic performance analysis, testing and learning, and implementing change ideas. He also highlighted the importance of client focus and a team approach to quality improvement.
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Synthetic fiber production is a fascinating and complex field that blends chemistry, engineering, and environmental science. By understanding these aspects, students can gain a comprehensive view of synthetic fiber production, its impact on society and the environment, and the potential for future innovations. Synthetic fibers play a crucial role in modern society, impacting various aspects of daily life, industry, and the environment. ynthetic fibers are integral to modern life, offering a range of benefits from cost-effectiveness and versatility to innovative applications and performance characteristics. While they pose environmental challenges, ongoing research and development aim to create more sustainable and eco-friendly alternatives. Understanding the importance of synthetic fibers helps in appreciating their role in the economy, industry, and daily life, while also emphasizing the need for sustainable practices and innovation.
1. PETER HYNES
Dispensers of California, Inc.
Presented by
Mayur Fofandi
Omkar Mishra
Keyuri Bapat
Amit Singh
Nitish Kumar
2. Creator of a new and improved commercial
paint spray.
INTRODUCTION
3. His friends offered to invest in a new
corporation with a $2,00,000 capitalization.
4. • The incorporation cost was $2,500
• Cost of equipment to be used in assembling the paint spray
dispensers was $85,000
• Short term loan from local bank was $30,000.
• Manufacturing payroll was $145,000
• Other manufacturing cost was $62,000
• The sales done was $598,500
• Depreciation cost was $8,500 but Hynes estimated the useful
life of equipment to be 10 years.
5. Patent
A patent is an exclusive right granted for an invention, which
is a product or a process that provides, in general, a new way
of doing something, or offers a new technical solution to a
problem.
The United States Patent and Trademark Office (USPTO or
Office) is the government agency responsible for examining
patent applications and issuing patents.
6. Types of patent
1. A utility patent protects the functional aspects of an
invention. It covers machines, processes and methods. It is
granted for 20 years.
2. A design patent issued for the appearance, design, shape or
general ornamentation of an invention. It is given for 14
years.
3.A plant patent is available for discovery or invention of plants.
It is given for 20 years
7. Accounting Concept for Preparation of
Income statement:
• MATCHING CONCEPT: The matching concept represents the
primary difference between accrual accounting & cash basis
accounting .’’Matching” means the firms report revenue and the
expenses that brought them in the same period.
• PERIOD CONCEPT: An accounting period is the span of time
covered by a set of financial statements . This define the range over
which business transactions are accumulated into financial
statement. Needed by investor so they can compare the results of
successive time period.
• CONSISTENCY CONCEPT: The consistency concept requires
accountants to be consistent from one accounting period to another in
applying accounting principles, methods, practices, and procedures.
8. • REVENUE RECOGNITION CONCEPT: This principle state that,
under the accrual basis of accounting, you should only record
revenue when an entity has substantially completed a revenue when it
has been earned.
• CONSERVATISM CONCEPT : This is the general concept of
recognizing expenses and liabilities as soon as possible when there
is uncertainty about the outcomes, but to only recognize revenue and
assets when they are assured of being received.
• MATERIALITY CONCEPT : The materiality concept is principle
reporting firms must disclose all such matters. They must disclose
everything that is important to the report audience.
9. BALANCE SHEET OF Dispensers of California, Inc.
At the opening of the year (Amount in $)
ASSETS Amount LIABILITIES & OWNERS’ EQUITY Amount
Current Assets: Owners’ Equity
Cash 80,000 Hynes’ Equity 1,20,000
Investors’ Equity 80,000 2,00,000
Non-current Assets:
Patent 1,20,000
Total 2,00,000 Total 2,00,000
10. How might Hynes and the investors use the profit-plan
in managing the business.
1. The profit plan prepared by Hynes can be helpful in forecasting the
financial position (assets and liabilities) of the business.
2. This would assist Hynes and investors to plan the business in advance and
improve on profits.
3. The information can be used to determine the solvency of the business by
showing how much assets are available for payment of liabilities and
dividends.
4. It can prove as a good tool for budgeting and can uncover many potential
bottlenecks before they occur.
5. Hynes and investors may use the profit plan to decide on goals and
objectives that can serve as benchmark for evaluating subsequent
performance.
11. Transaction Analysis
EQUITY
Sr. no. CASH + PATENT + COMPONENTPARTS +EQUIPMENTS =BANK LOAN +A/C PAYABLES +TAX PAYABLE +OWNERS' EQUITY DESCRIPTION OF TRANSATION
1 80,000 1,20,000 2,00,000 Capital stock
2 -2,500 -2,500 Incorporation Cost
3 85,000 85,000 Equipment purchased on credit
4 -25,000 -25,000 Labour and Development Cost
5 2,12,100 2,12,100 Component part purchased on credit
6 30,000 30,000 Loan taken from bank
7 1,45,000 -1,45,000 Manufacturing payroll payable
8 62,000 -62,000 Manufacturing cost payable
9 -63,000 -63,000 Selling, general and admtn. cost paid
10 (Bal. Fig.) -1,97,000 -1,97,000 Component parts used
11 5,98,500 5,98,500 Total sales received in cash
13 -8,500 -8,500 Depreciation charged on equipments
14 -20,000 -20,000 Patent amortization
16 -5,000 -5,000 Dividend paid
17 22,500 -22,500 income tax provision made
18 -5,04,100 -5,04,100 All amounts due to payables, paid in cash
19 -30,500 -30,000 -500 Bank loan repaid with interest
Total 78,400 1,00,000 15,100 76,500 Nil Nil 22,500 2,47,500 Total
ASSETS LIABILITIES
12. BALANCE SHEET OF Dispensers of California, Inc.
At the end of the year (amount in $)
ASSETS Amount LIABILITIES & OWNERS’ EQUITY Amount
Current Assets: Current Liabilities & Provisions:
Cash 78,400 Income tax provision 22,500
Component Parts 15,100 93,500
Non-current Liabilities:
Non-current Assets: Nil Nil
Patent 1,00,000
Equipment 76,500 1,76,500 Owners’ Equity
Capital Stock:
Hynes’ Equity 1,20,000
Investors’ Equity 80,000 2,00,000
Add: Retained Earnings 47,500 2,47,500
Total 2,70,000 Total 2,70,000
13. Income statement of Dispensers of California, Inc.
at the end of the year (Amount in $)
PARTICULARS Amount Amount
A. Revenue (Sales) 5,98,500
B. Expenses:
Incorporation cost 2,500
Labour and development cost 25,000
Manufacturing payroll 1,45,000
Other manufacturing cost 62,000
Selling, general and administration cost 63,000
Interest on bank loan 500
Depreciation 8,500
Patent amortization 20,000
Component parts used 1,97,000
Income tax provision 22,500
Dividend paid 5,000 (5,51,000)
C. Retained Earning (A-B) 47,500
14. Hynes made a number of accounting decisions. Do
you agree with these decisions?
• There are three accounting decisions that require Hynes to exercise
judgement. They are:
1. Patent valuation (60% of capital stock)
2. Patent amortization period (6 year period)
3. Equipment depreciation period (10 years with no salvage value)
4. While the patent's legal life is 16 years, the technology advancements
can reduce the effective life of patent to 10 years and is a fair
assumption.
Yes me and my teammates do agree with the accounting decisions
taken by Mr. Peter Hynes.
15. BALANCE SHEET OF Dispensers of California, Inc.
At the opening and closing of the year (amount in $)
ASSETS OP. YEAR CL. YEAR LIABILITIES OP. YEAR CL. YEAR
Current Assets: Current Liabilities & Provisions:
Cash 80,000 78,400 Income tax provision Nil 22,500
Component Parts Nil 15,100
Non-current Liabilities: Nil Nil
Non-current Assets:
Patent 1,20,000 1,00,000 Owners’ Equity
Equipment Nil 76,500 Capital Stock 2,00,000 2,47,500
Total 2,00,000 2,70,000 Total 2,00,000 2,70,000
16. Adjustments:
• Equipment purchased during the year for $85,000 and depreciation
charged $8,500.
• There is no withdrew or introduced of capital stock during the year.
• Dividend paid $5,000.
• Interest on Bank loan $500.
17. Cash Flow Statement (AS-3 Revised) of Dispensers of California, Inc.
(Amount in $)
PARTICULARS $ Amount
A. Operating Activity
Net profit after interest & tax and
extraordinary items
47,500
Add: Income tax provision 22,500
Add: Dividend 5,000
Add: Interest on bank loan 500
Net profit before interest & tax 75,500
Add: Patent Amortization 20,000
Add: Depreciation on Equipment 8,500
Operating profit before working
capital changes
1,04,000
Less: Increase in Component parts (15,100)
Cash inflow from Operating activity 88,900
PARTICULARS $ Amount
B. Investing Activity
Purchase of Equipment (85,000)
Cash outflow from Investing activity (85,000)
C. Financing Activity
Dividend Paid (5,000)
Interest on bank loan (500)
Cash outflow from Financing activity (5,500)
Net increase in cash & cash equivalent
(A+B+C)
(1,600)
Add: Opening balance of Cash 80,000
Closing balance of Cash 78,400
18. Return on equity: The return on equity (ROE) is a measure of the
profitability of a business in relation to the equity, also known as net assets
or assets minus liabilities. ROE is a measure of how well a company uses
investments to generate earnings growth.
Return on Sales: Return on sales, often called the operating profit margin,
is a financial ratio that calculates how efficiently a company is at generating
profits from its revenue.
Current ratio: Current ratio is a liquidity ratio that measures a company's
ability to pay short-term obligations. It tells investors and analysts how a
company can maximize the current assets on its balance sheet to satisfy
its current debt and other payables. So a current ratio of 4.16 would
mean that the company has 4 times more current assets than current liabilities.