Take a look at this financial plan for an EcoFriendly cleaning product. Do these financial assumptions make sense? If not, what financial assumptions would you make?

Financial Plan. According to Gallup News website 39% of people are buying green products in east coast of America. We are assuming that 39% in Boston are interested buying green products. The total population in Boston is 673,184, which means that 262,541 are buying green products. We want to reach 1% of the customers within 6 months. We are assuming that we can sell 1000 units in the first month and we will sell 15,249 units by year one as a short term objective. The total start cost is $56,500 and the total funds are $81,000 ending with $24,500 cash. We get $60,000 loan from one member's father and we contribute $7,000 each. Total fixed cost in the first year is $9,550 each month, and $17,470 each month in the second year. We are assuming that we will sell 1000 units in the first month because there are some cleaning companies in Boston that use green products only, and they will try our products. The total revenue in the first month is $4255 with $1000 product cost. By the end of the first month we end up with a negative net income of ($-6,759). We start making profit when the sales unit increases in month six. By the end of the year we are assuming that we will sell 15,249 units with $171,963 revenue, and total cost of good sold of $40,199. Our net income will be $11,596 in first year. Second year, we increase marketing budget and hire more employees to reach $331,614 total revenue. By the end of year 2 our net income will be $39,063 and $72,322 on year 3. We maintain a positive cash flow to service during the first six months where our net income is negative. After six month our cash flow increases because we assuming that we will have a positive net income by six month. There are money companies in the market selling the same products we have and that means that the demand for green products is increasing. Our business makes sense because there are customers buying cleaning products and we are adding the value to customers by providing green cleaning products at a competitive price.

The Complete Accounting Cycle

On April 1, Mr. Oscar Matthews Opened up Oscar’s Home R & M, as a sole proprietor. During April he completed the following transactions:

April    1        Invested $40,000 cash in the business.

2        Purchased a lightly used pickup truck for $25,000, paying $6,000 cash and the balance on account.

3        Purchased supplies for $5,100 on account.

5        Paid $2,400 cash on a 1-year insurance policy effective April 1.

12        Billed customers $6,400 for home repair and maintenance services.

18        Paid $4,000 cash on amount owed on van and $2,100 on amount owed on supplies.

20        Paid $4,000 cash for employee salaries and wages.

21        Collected $4,000 cash from customers billed on April 12.

25        Billed customers an additional $8,000 for services.

30        Paid $400 for the monthly gasoline bill for the van.

30        Withdrew $1,800 cash for personal use.

Instructions:

This project, which must be completely typewritten, covers the entire accounting cycle. (Blank accounting forms may be downloaded from the blackboard). Hand written (in whole or in part) submittals will not be accepted and will receive a grade of zero.

1. Journalize and post the April transactions shown above.
2. Journalize and post the following adjustments:
   1. Unbilled and uncollected revenue for services performed on April 30 were $3,500.
   2. Depreciation on equipment for the month was $400.
   3. Expired insurance (hint: think).
   4. An inventory count shows $1,000 of supplies on hand on April 30.
   5. Accrued but unpaid employee salaries were $1,000.

1. Submit: 1. Adjusted Balance Sheet. 2. Income Statement. 3. Balance Sheet

Define total revenue, marginal revenue, and average revenue. Discuss why the demand curve is represented by the marginal revenue curve for a perfectly competitive firm

The following selected transactions were completed by Amsterdam Supply Co., which sells office supplies primarily to wholesalers and occasionally to retail customers:

Record on page 10 of the journal

Record on page 11 of the journal

Required:

Chart of Accounts

Journal

Journalize the entries to record the transactions of Amsterdam Supply Co. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. Scroll down for page 11 of the journal.

PAGE 10

JOURNAL

ACCOUNTING EQUATION

Required information

[The following information applies to the questions displayed below.]

Hogan Company uses the net method of accounting for sales discounts. Hogan offers trade discounts to various groups of buyers.

On August 1, 2021, Hogan factored some accounts receivable on a without recourse basis. Hogan incurred a finance charge.

Hogan also has some notes receivable bearing an appropriate rate of interest. The principal and total interest are due at maturity. The notes were received on October 1, 2021, and mature on September 30, 2022. Hogan’s operating cycle is less than one year.

Required:

1a. What is the rationale for the amount recorded as sales under the net method?




1b. Using the net method, describe any effect on Hogan’s sales revenues and net income when customers do not take the sales discounts.




2. Describe the effect trade discounts have on the amount recorded as sales revenue and accounts receivable.




3. Explain why Hogan should or shouldn't decrease accounts receivable to account for the receivables factored on August 1, 2021.




4. Explain the reasoning for the classification of the interest-bearing notes receivable as current or non-current in its December 31, 2021, balance sheet.

1. Which of these transactions requires a debit entry to Cash?

a. collected balance due from customers

b. paid balance due to suppliers

c. sold merchandise on account

d. purchased supplies for cash

2. What is the impact on the accounting equation when a payment of account payable is made?

a. both sides decrease

b. both sides increase

c. only the Asset side changes

d.neither side changes

3. That a business may only report activities on financial statements that are specifically related to company operations, not those activities that affect the owner personally, is known as which of the following?

a. separate entity concept

b. monetary measurement concept

c. going concern assumption

d. time period assumption

4. Which set of accounts has the same type of normal balance?

a. Accounts payable, retained earnings

b. Cash, accounts payable

c. Prepaid rent, unearned service revenue

d. Dividends, common stock

5. The step-by-step process to record business activities and events to keep financial records up to date is ________.

a. accounting cycle

b. day-to-day cycle

c. general ledger

d. journal

Assume that you are a consultant for an international management strategy consulting firm. Your firm has been approached by Mr. Hans Wursching, CEO of TransSprech, A.G., a newly formed cellular phone service and phone provider based in Stuttgart, Germany. TransSprech has a satellite GSM network with complete coverage in Europe and the United States, as well as throughout most countries in the world. The company has established some semblance of a marketing and management strategy, and you have been asked to review the current strategy and help the company go to the next level by growing its sales. You recently conducted the initial information-gathering meeting with Mr. Wursching, and received the following information: ? TransSprech maintains corporate offices in numerous cities around the world. However, its customer service outlets and retail sales are conducted through the company website, as well as through licensed electronic retailers. It does not maintain its own customer service or retail locations. ? Its target markets are both companies and individuals wanting cellular phone service with worldwide coverage and who are willing to pay a premium to get it. It already has about three thousand customers worldwide and is hoping to grow to ten thousand by year end. ? Corporate customers are more valuable customers because they are buying in larger volumes. Establishing a customer base is very important as this company attempts to establish itself. ? No sales force has been established. So far, the company has received many customers in response to its advertising. ? It offers individual customers four different cost plans with respect to the cellular service as well as five different phone options. However, corporate customers can negotiate variations within the established options. ? The phones themselves are similar to those used by TransSprech competitors but the satellite network providing the coverage is far more advanced. ? The company has retained a Berlin-based advertising and public relations agency to develop a worldwide advertising campaign. Print and TV advertisements have recently saturated the European market and will soon be shown in the US market. The company is currently running several promotions to get its product and name known; however, its long-term goal is to offer a premium, non-discounted product that is desired because of its value and quality, not low price. ? Because the company and its product are in the early stages of development, there have been technical problems, and the company has had to provide a great deal of service to its customers. ? Mr. Wursching understands that it costs more to acquire new customers than to retain existing ones, so he would like to establish a customer relationship management plan at some point to improve customer loyalty and retention. He has a well-trained customer service operator staff in place.

Allah, Ballah and Callah formed a Chartered Accountancy Firm in 2002. Their partnership agreement provided for the following:

1. Profits and Losses are to be shared as follows: Allah takes half, Ballah takes one-third and Callah takes the remainder.
2. Interest is to be charged on the partners’ drawings and capital balances at 3.5%vand 5% per annum respectively.
3. Allah, the administrative partner, is to be paid a monthly salary of GH¢2,400
4. Drawings by the partners were effected as follows:

Allah         GH¢36,000 on April 1,2004

Ballah        GH¢48,000 on June 30,2004

Callah        GH¢43,200 on September 30, 2004

In order to increase his capital contribution, Ballah, on July1,2004 released one of his private cars with a value of GH¢50,000 for exclusive use of the firm. He accordingly transferred the ownership of the car to the firm on the same date. On September 30,2004 it was further agreed that Allah should withdraw GH¢10,000 from his capital, while Callah should increase his capital by GH¢8,000.

The net profit for the year under consideration was GH¢71,565.

The partners credit balances as at January1, 2004 were as follows:

                                          Capital Account          Current Account

Allah                                 GH¢180,000                 GH¢10,500  

Ballah                                GH¢90,000                   GH¢8,200    

Callah                                GH¢62,000                    GH¢7,900   

Required: Prepare for the year ended 31^st December,2004

1. Profit and Loss Appropriation Account.
2. The Capital and Current Accounts of the partners in a columnar form.

Mayfair Co. allows select customers to make purchases on credit. Its other customers can use either of two credit cards: Zisa or Access. Zisa deducts a 3% service charge for sales on its credit card. Access deducts a 2% service charge for sales on its card. Mayfair completes the following transactions in June.

Required:
Prepare journal entries to record the preceding transactions and events. (The company uses the perpetual inventory system.) (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Create a new table named CUSTOMER_STATUS.The table will hold the Customer_Status_Id and the Customer_Status_Description with possible values:

Inactive, Active, Very_Active

These values will be used to characterize the customers so that:

                  Inactive Customers => Have 0 orders

                  Active Customers => Have between 1 and 3 orders

Very Active Customers => Have 4 or more orders