imagine a small business that you would like to open (Gym). Give a comprehensive overview of the opportunities and challenges facing the business. This might include (but not limited to) discussions of your business's customers, revenue sources, business model, competition, operating environment, marketing efforts, information technology, management structure, etc., etc. s. Be creative. Be concise.
In: Operations Management
BUSI 320 Comprehensive Problem 2 Spring 2020 You have been asked to assess the expected financial impact of each of the following proposals to improve the profitability of credit sales made by your company. Each proposal is independent of the other. Answer all questions. Showing your work may earn you partial credit. Proposal #1 would extend trade credit to some customers that previously have been denied credit because they were considered poor risks. Sales are projected to increase by $200,000 per year if credit is extended to these new customers. Of the new accounts receivable generated, 6% are projected to be uncollectible. Additional collection costs are projected to be 5% of incremental sales, and production and selling costs are projected to be 78% of sales. Your firm expects to pay a total of 30% of its income after expenses in taxes.
1) Compute the incremental income after taxes that would result from these projections:
2) Compute the incremental Return on Sales if these new credit customers are accepted: If the receivable turnover ratio is expected to be 5 to 1 and no other asset buildup is needed to serve the new customers…
3) Compute the additional investment in Accounts Receivable
4) Compute the incremental Return on New Investment
5) If your company requires a 20% Rate of Return on Investment for all proposals, do the numbers suggest that trade credit should be extended to these new customers? Explain.
Proposal #2 would establish local collection centers throughout the region to decrease the time it takes to convert credit payments that are mailed in by check to cash. It is estimated that establishing these collection centers would reduce the average collection time by 2 days (from 5 days to 3 days).
1) If the company currently averages $20,000 in collections per day, how many dollars will this suggested cash management system frees up?
2) If all freed up dollars would be used to pay down debt that has an interest rate of 8%, how much money could be saved each year in interest expense?
3) Do the numbers suggest that this new system should be implemented if its total annual cost is $5200? Explain.
In: Finance
Part 4: UNDERSTANDING THE FINANCIAL STATEMENTS OF BUSINESS CUSTOMERS
You are provided with the following financial ratios of Rob Unlimited:
Return on assets: Income before interest and tax/total assets x 100/1 = 61.666666%
Gross profit ratio: Gross profit/Principal revenue x 100/1 = 30%
Operating margin Operating income/principal revenue x 100/1 = 12.333333%
Net income margin: Net income before taxation/ Principal revenue x 100/1 = 10.666667%
Turnover ratio of fixed assets: Principal revenue / fixed assets = 15 times
Turnover ratio of current assets: principal revenue/ current assets = 7.5 times
Current ratio: current assets/current liabilities = 3:1
Asked: Use the information from the ratios to complete the statement of financial position and statement of comprehensive income for Rob Unlimited.
Statement of financial position as at 28 February 20xx
Shareholder Interest
Ordinary share capital $500,000
General reserves $_______
Non-current liabilities
Long term loan $600,000
Current liabilities
Trade creditors $200,000
Other Short term loans $_______
Total $______
Non-current assets
Vehicles and equipment $______
Current assets
cash $150000
Debtors $_______
stock $600000
Total $________
Statement of comprehensive income for the year ended 28 February 20xx
Principle revenue $9000000
Inventory beginning of year $900000
Plus purchase $______
Less Inventory end of year $600000
Cost of goods sold $6300000
Gross income $_______
Operating expenses $_______
Depreciation $90000
Net income before interest and taxation $1110000
Interest payments $_______
Net income before taxation $_______
In: Finance
Determine the effect of the following errors on a company's total revenue, total expenses, and net income. Indicate the effect by selecting Overstated (too much), Understated (too little),or Not Affected.
| Transactions | Total Revenue | Total Expenses | Net Income |
| Example: A check for $325 was written to pay on account. The accountant debited Rent Expense for $325 and credited Cash for $325. | Not Affected | Overstated | Understated |
| a. $615 was received on account from customers. The accountant debited Cash for $615 and credited Professional Fees for $615. | |||
| b. The owner withdrew $1,500 for personal use. The accountant debited Salary Expense for $1,500 and credited Cash for $1,500. | |||
| c. A check was written for $1,265 to pay the rent. The accountant debited Rent Expense for $1,625 and credited Cash for $1,625. | |||
| d. $2,100 was received on account from customers. The accountant debited Cash for $2,100 and credited the Capital account for $2,100. | |||
| e. A check was written for $525 to pay the phone bill received and recorded earlier in the month. The accountant debited Phone Expense for $525 and credited Cash for $525. | |||
In: Accounting
Filinvest Land vs. Court of Appeals (G.R. No. 138980, September 20, 2005)
case digest
Facts
issue
ruling (or how law applied)
In: Finance
Discuss the main findings from research on the Chore Wars —the gendered division of household labor—as studied by Hochschild (1989, 2003) and Zelizer (2005), in detail.
In: Psychology
Stevens Company presents the following information:
Current annual credit sales : $24,000,000
Collection period : 3 months
Terms : net/30
Rate of return : 18%
The company is considering offering a 4/10, net/30 discount. It anticipates that 30 percent of its customers will take advantage of the discount. The collection period is expected to decrease to 2 months. How much is the net advantage/disadvantage of the planned discount policy? Should the discount policy be implemented?
In: Finance
Question 5
LGP sells bottled gas to petrol stations for resale. The petrol stations buy the bottles in lots of 500 for $15000. LPG’s variable costs per bottle are $25. Monthly fixed costs are $102,000.
Required
1. Calculate the breakeven point in sales revenue and units (gas bottles).
2. Calculate the volume required to earn $300,000.
3. How does your analysis change if you learn that LPG uses sales agents who are paid a commission of $0.50 per gas bottle sold?
Question 6
An energy drink company sells its product to supermarkets and wholesalers for $5 per can. Its factory fixed costs per month are $200,000. Its monthly marketing costs are $80,000. The variable costs per can are $0.50.
Required
1) Calculate the breakeven point in units and $ revenue per month.
2) Calculate the $ revenue required to reach a profit target of $250,000.
3) Calculate the $ revenue required to reach a profit target of $250,000 assuming that the company is liable to 30% income tax.
Question 7
Al Ain College (AAC) offers evening courses for mature students in various business subjects. AAC charges AED500 for a 4-week course. The monthly fixed costs are AED 120,000. Variable costs per student are AED50.
Required
1. Calculate the breakeven point in number of students and AED revenue.
2. Calculate the contribution margin ratio.
3. How many students need to attend AAC to generate a monthly profit of AED80,000?
4. How does your analysis change if AAC is liable to 25% income tax?
In: Accounting
DIRECTIONS: A) Prepare journal entries for the following items The following transactions occurred during 2017 (the company uses a perpetual inventory system with FIFO):
1) Jan 4 Stockholders invested an additional $10,000 cash in the business in exchange for common stock
2) Jan 4 Purchased 20 turkeys at $50 each on account from Turkey Farms.
3) Jan 4 Established a $200 petty change fund
4) Jan 5 Sold 6 turkeys for $200 each to Mr. Pilgrim, terms 2/10, n/30.
5) Jan 6 Sold 12 turkeys at $200 each for cash
6) Jan 8 Paid wages of $240
7) Jan 9 Mr. Pilgrim returned one turkey because they originally ordered only 5.
8) Jan 12 Purchased equipment on account for $2,000
9) Jan 14 Received payment in full from Mr. Pilgrim
10) Jan 15 Purchased 10 turkeys at $52 each on account from Thanksgiving Industries, terms 1/10, n/30.
11) Jan 15 Paid utility bill of $120
12) Jan 16 Returned 2 turkeys to Thanksgiving Industries because they were defective.
13) Jan 17 Sold 8 turkeys for $245 each for cash
14) Jan 18 Paid tax bill from 2016.
15) Jan 18 Performed the service of turkey grooming ($800 worth); we received the cash in 2016
16) Jan 19 Paid Accounts Payable in full from 2016
17) Jan 20 Received $2,200 cash from customers paying on their accounts
18) Jan 21 Received a bill from the local radio station for advertising in the amount of $400
19) Jan 22 Purchased 20 turkeys for $55 each on account from Stuffing & Cranberry Company; terms 2/5, n/30
20) Jan 23 Sold 10 turkeys to Turkey Leg Corporation for $260 each on account; terms 3/10, n/30
21) Jan 25 Paid freight costs from Stuffing & Cranberry Company of $10.
22) Jan 26 Received payment in full from Turkey Leg Corporation
23) Jan 27 Sold 10 turkeys to customers on credit for $260 each.
24) Jan 28 Paid Stuffing & Cranberry Company for the purchase on Jan 22
25) Jan 29 Petty cash was replenished and had the following receipts: gas receipt for $20, postage stamps for $39, Office Depot receipt for $16, miscellaneous receipt for $30, travel receipts for $40
26) Jan 30 Performed a physical inventory count and counted only 1 turkey on hand.
27) Jan 30 Bank statement arrives today and there is a $20 bank service charge as well as a $120 NSF check.
28) Jan 31 One month’s prepaid insurance needs to be expensed for January ($1,200 is for the whole year)
29) Jan 31 Depreciate one month’s worth of the building and equipment (Using straight line method; building has a useful life of 20 years, equipment has a useful life of 5 years and no salvage value)
30) Jan 31 The estimated bad debt expense under the percentage of sales basis is $120.
31) Jan 31 Paid dividends of $500
In: Accounting
I have already created the journal entries for the following information but I need the t-accounts, income statement, statement of retained earning and balance sheet:
The following transactions occurred during 2018 (the company uses a perpetual inventory system with FIFO):
1) Jan 4 Stockholders invested an additional $10,000 cash in the business in exchange for common stock
2) Jan 4 Purchased 20 rabbits at $50 each on account from Jelly Bean Farms.
3) Jan 4 Established a $200 petty change fund
4) Jan 5 Sold 6 rabbits for $200 each to Mr. Karrot, terms 2/10, n/30.
5) Jan 6 Sold 12 rabbits at $200 each for cash
6) Jan 8 Paid wages of $240
7) Jan 9 Mr. Karrot returned one rabbit because they originally ordered only 5.
8) Jan 12 Purchased equipment on account for $2,000
9) Jan 14 Received payment in full from Mr. Karrot
10) Jan 15 Purchased 10 rabbits at $52 each on account from Easter Industries, terms 1/10, n/30.
11) Jan 15 Paid utility bill of $120
12) Jan 16 Returned 2 rabbits to Easter Industries because they were defective.
13) Jan 17 Sold 8 rabbits for $245 each for cash
14) Jan 18 Paid tax bill from 2017.
15) Jan 18 Performed the service of rabbit grooming ($800 worth); we received the cash in 2017
16) Jan 19 Paid Accounts Payable in full from 2017
17) Jan 20 Received $2,200 cash from customers paying on their account
18) Jan 21 Received a bill from the local radio station for advertising in the amount of $400
19) Jan 22 Purchased 20 rabbits for $55 each on account from Eggs & Chicks Company; terms 2/5, n/30
20) Jan 23 Paid freight costs from Eggs & Chicks Company of $10.
21) Jan 25 Sold 10 rabbits to Bunny Tail Corporation for $260 each on account; terms 3/10, n/30
22) Jan 26 Received payment in full from Bunny Tail Corporation
23) Jan 27 Sold 10 rabbits to customers on credit for $260 each.
24) Jan 28 Paid Eggs & Chicks Company for the purchase on Jan 22
25) Jan 29 Petty cash was replenished and had the following receipts: gas receipt for $20, postage stamps for $39, Office Depot receipt for $16, miscellaneous receipt for $30, travel receipts for $40
26) Jan 30 Performed a physical inventory count and counted only 1 rabbit on hand.
27) Jan 30 Bank statement arrives today and there is a $20 bank service charge as well as a $120 NSF check.
28) Jan 31 One month’s prepaid insurance needs to be expensed for January ($1,200 is for the whole year)
29) Jan 31 Depreciate one month’s worth of the building and equipment (Using straight line method; building has a useful life of 20 years, equipment has a useful life of 5 years and no salvage value)
30) Jan 31 The estimated bad debt expense under the percentage of sales basis is $120.
31) Jan 31 Paid dividends of $500
In: Accounting