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Essay on Case 1-1 Ribbons an’ Bows, Inc

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Table of Contents
Issues 1
Facts 1
Analysis 3 Question 1 3
a. Report on the three-month operation of Ribbons an’ Bows, Inc. 3
b. Profit of the Company 4
c. The reason for the cash in the bank decline 5 Question 2 6 Question 3 8
Conclusions 9

Issues 1. a How would you report on the three-month operations of Ribbons an’ Bows, Inc., through June 30? b Was the company profitable? (Ignore income taxes.) c Why did its cash in the bank decline during the three-month operating period? 2. How would you report the financial condition of the business on June30, 2010? 3. Do you believe Carmen’s first three months of operation could be characterized as “successful”? Explain your answer.
Facts
1.…show more content…
Profit of the Company
The income statement presents the company was profitable if Carmen ignore income taxes, because the company has a net income $1,480 before taxes. c. The reason for the cash in the bank decline
April balance of the $4,000, so beginning cash was $4,000.Carmen got cash sales revenue $7,400, less paid cash $1,510 for employee wages, less paid replenishment inventory $2,900,less rent for three-month $1,800, less paid cash $1,800 for sewing machine. Finally the ending cash was $3,390. According to above details , the statement of cash flow for the three-month operations of Ribbons an’ Bows, Inc., can be created as follows.
Ribbons an’ Bows, Inc.
Statement of cash flow
As of June 30, 2010
Beginning cash $4,000
Sales $7,400
Merchandise inventory ($2,900)
Wages (1,510)
Rent for three month ($1,800)
Sewing machine ($1,800)
Cash and cash equivalents on June 30 $3,390
According to the cash flow statement, the commercial sewing machine purchase for $1800,
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