Chapter MB, Problem 15M

The following historical information is from Assisi Community Markets. Calculate the working capital and current ratio for each year. What observations do you make, and what actions might the owner consider taking?

Michael Anderson is starting his computer programming business and has deposited in initial investment of $15,000 into the business cash account.  Identify how the accounting equation will be affected.

In early December Alice and Bob decided to open Sample Cafe with $14,000 of their own money and $19,000 borrowed from a friend. They have spent $11,000 on equipment and furniture, and they have purchased $2,800 worth of cups for cash which they expect will be used over the next three months. Having put down a $2,400 deposit for a location on Main St., they will pay the first month’s rent when they open their doors on January 1. In the balance sheet template below, fill in the appropriate values as of December 31.

The president of the retailer Prime Products has just approached the company’s bank with a request for a$30,000, 90-day loan. The purpose of the loan is to assist the company in acquiring inventories. Becausethe company has had some difficulty in paying off its loans in the past, the loan officer has asked for a cashbudget to help determine whether the loan should be made. The following data are available for the monthsApril through June, during which the loan will be used:a. On April 1, the start of the loan period, the cash balance will be $24,000. Accounts receivable onApril 1 will total $140,000, of which $120,000 will be collected during April and $16,000 will becollected during May. The remainder will be uncollectible.b. Past experience shows that 30% of a month’s sales are collected in the month of sale, 60% in themonth following sale, and 8% in the second month following sale. The other 2% represents bad debtsthat are never collected. Budgeted sales and expenses for the…

Jorge Martinez is thinking about buyingan existing printing business and hasbeen carefully studying the records of thebusiness to get a good handle on its historicalfinancial performance. Jorge heardthat you are taking a class in entrepreneurshipand asks you, “What suggestionsdo you have for me to make the best use ofthis financial information (i.e., three yearsof audited income statements, balancesheets, and statements of cash flow)?”What suggestions would you give Jorge formaking the maximum use of the financialstatements?

Kampfire, Inc., a very successful manufacturer of camping equipment, is considering going public next month to raise funds to help finance the company’s futuregrowth. The financial manager of Kampfire has approached the investmentbanking firm at which you work seeking help with its decision. Your boss askedyou to explain the nature of the U.S. financial markets and the process of issuingequity to the financial manager. To help with this task, your boss has asked youto answer the following questions in explaining the U.S. financial system to thefinancial manager:a. What is a financial market? How are financial markets differentiated frommarkets for physical assets?b. Differentiate between money markets and capital markets.c. Differentiate between a primary market and a secondary market. If Microsoftdecided to issue additional common stock and an investor purchased 1,000shares of this stock from the underwriter, would this transaction be a primarymarket transaction or a secondary market…

On January 1, 2019, Sharon Matthews established Tri-City Realty, which completed the following transactions during the month:   Sharon Matthews transferred cash from his personal bank account to a new account to start a new business, $40,000. Paid rent on office for the month, $6,000. Purchased supplies on account, $3,200. Paid creditor on account, $1,750. Earned fees, receiving cash, $18,250. Paid automobile expenses (including rental charge) for month, $1,880, and miscellaneous expenses, $420. Paid office salaries, $5,000. Determined that the cost of supplies used was $1,400. Withdrew cash for personal use, $2,000. Instructions Journalize entries for transactions (1) through (9), using the following account titles: Cash; Supplies; Accounts Payable; Capital; Drawing; Fees revenues; Rent Expense; Office Salaries Expense; Automobile Expense; Supplies Expense; Miscellaneous Expense. (Explanations may be omitted). Prepare T accounts, using the account titles in (1). Post the journal…

. PQR is the accounting intern for, a firm that has many small clients that need monthly accounting services. Ray has been asked by the partner in charge to analyze the asset section of firm’s balance sheets which follow:     2011 2012 Cash   $2,500 $3,900 Accounts receivable, net   35,000 40,000 Inventory   85,000 122,000 Other current assets   3,400 4,110 Total current assets   125,900 170,010 Property , plan &equipment , net   180,000 230,000 Other assets   15,000 26,000 Total assets   $320,900 $426,010   Required Prepare a common-size analysis of the assets section of the firm’s balance sheet for 2011 and 2012.Round all percentage answers to one decimal place

Assume that you are nearing graduation and that you have applied for a job at a local bank. As part of the bank’s evaluation (interview) process, you have been asked to take an exam that covers several financial analysis techniques. The hiring decision depends on how you would answer the following questions: Part I: TVM Analysis. The first section of the test addresses time value money analysis.John andMaryareayoungcouple, who want to put their finance in order. Boththehusbandandthe wifeare27yearsagoandinstableemployment. They want to manage their savings and earnings to achieve a better return and reduce the risks. You want to help them with their financial planning by answering a series of questions as follows: ThegreatAlbertEinsteinoncesaid“Compoundinterestistheeighthwonderofthe world. He who understands it earns it...he who doesn't...pays it.” Whatisthefuture value of an initial $500 after 30 years if it is invested in an account paying 15 percent annual interest? What is the…