Case 1-1 Ribbons an’ Bows, Inc
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. In January, 2010, Carmen took a loan $10,000 for 6 percent interest per year from her cousins and she would invest $1,000 in the equity of the business 2. On March 1, 2010, the free legal work by Carmen’s uncle 3. In March, 2010, Carmen deposited the cousin’s loan $10,000 and her $1,000 contribution. And she signed a 18-month contract for rent $600 per month, which begins in April 1. She also prepaid the last two months’ rent. She had opened merchandise inventory $ 3,300, cash register deposit $250, store supplies $100, paid for April 2 edition advertising $150. And used computer purchased $2,000 on March 31, which would be replaced within two years. 4. On May 1, 2010, Carmen purchased a used sewing machine for $1,800. She estimated it would be used for about 5 years from May 1. 5. At the end of June, Carmen had cash revenue $7400 and was owed $320, had paid employee wages $1,510, owed them $90 during the last week of June, and rent for three-month had been paid. And inventory replenishments costing $2,900 paid for by June 30, she estimated inventory on hand had cost $4,100.The supplies remaining $20. 6. The cash in the company’s June 30 bank account was $3,390, which was less than April 1 balance of $4,000.
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. In January, 2010, Carmen took a loan $10,000 for 6 percent interest per year from her cousins and she would invest $1,000 in the equity of the business 2. On March 1, 2010, the free legal work by Carmen’s uncle 3. In March, 2010, Carmen deposited the cousin’s loan $10,000 and her $1,000 contribution. And she signed a 18-month contract for rent $600 per month, which begins in April 1. She also prepaid the last two months’ rent. She had opened merchandise inventory $ 3,300, cash register deposit $250, store supplies $100, paid for April 2 edition advertising $150. And used computer purchased $2,000 on March 31, which would be replaced within two years. 4. On May 1, 2010, Carmen purchased a used sewing machine for $1,800. She estimated it would be used for about 5 years from May 1. 5. At the end of June, Carmen had cash revenue $7400 and was owed $320, had paid employee wages $1,510, owed them $90 during the last week of June, and rent for three-month had been paid. And inventory replenishments costing $2,900 paid for by June 30, she estimated inventory on hand had cost $4,100.The supplies remaining $20. 6. The cash in the company’s June 30 bank account was $3,390, which was less than April 1 balance of $4,000.