This preview has intentionally blurred parts. Sign up to view the full document

View Full Document

Unformatted Document Excerpt

a Write four paragraph answer, citing the text, pretending that your current (or previous) job is its own company. Prepare a simple version of each of the 4 typical financial statements (see page 17) for this pretend company. Although it is not necessary to display statements, state what each of the statements tells you about your job (pretend company). Respond to at least two of your fellow students postings. Financial Statements This section shows how financial statements are prepared from the analysis of business transactions. The four financial statements and their purposes are: 1. Income statement the income statement reflects the organizations revenues and expenses and reflecting the net income/loss over a specific period of time. 2. Statement of owners equity gives an explanation of any changes in equity from net income or loss including profits from the organizations investments and withdrawals over a specific period of time. 3. Balance sheet the balance sheet is a description of the organizations financial standing, i.e. assets, liabilities, and equity, over a specific period of time. 4. Statement of cash flows The statement of cash flows reflects incoming and outgoing monies, over a specific period of time (Brownfield. 2007. p 17). I have a satellite office that researches land ownership, liens, and other encumbrances. With the responsibility of operating a satellite office I have to produce statements, much like the ones that I mentioned in the above paragraph. I produced income statements, quarterly, to show my expenses and the monies generated. Fortunately, I do not, nor do I foresee, make any statements of equity because the only equipment that I have is my laptop that is secured solely for my job. Additionally, I do not have to produce any balance sheets since I do not have enough assets to need to produce one. However, I do have to produce a statement of cash flows to turn into my home office reflecting any billing that I have sent out and confirming the incoming monies. My cash flow statement is sent out monthly to keep my home office informed of what they need to do to collect any outstanding bills. (Brownfield, D. L.. (2007). MBA essentials. New York : McGraw-Hill Learning Solutions. ISBN: 978-0-697-77527-6) Review the accounting statements for this lemonade stand (see page 4 of the SeasonOneSample PDF). What do these statements tell you about the operation? Explain and support your answer. Respond to at least two of your fellow students postings. Day 1 - Weather was normal Partnership formed using $20 cash from each of two partner as initial capital so after forming partnership, the startup money equaled $40.00. Purchases charged on day 1 are for one pitcher that amounted to $3.25, mixing spoons for $2.50, 150 cups that amounted to $4.50, 15 tubes of lemonade mix that amounted to $7.50, one bag of ice that amounted to $1.75 making all the expenses equal to $19.50. Subtracting these costs from the initial $40.00 left $20.50. The cost fact was for the cups (.03 * 56) $1.68, the cost for the tube mix for the day came to $5.00 and the bag of ice cost $1.75, making the cost of inventory used at $8.67 leaving the ending cash at $56.80 and store balance at $19.50. DAY 1 Partnership Purchase Charges Today sales Out of Inventory used Ending cash Ending balance capital $40.00 1 Spoon $3.2556 C.s * .30 = $16.80 $2.50 150 C.s 1 Pitcher 98 / 4.25= 0.043per hour 64 cups $1.92 $56.80 $4.50 15 Tube Mix $7.50 1 bag ice $1.75 1 Bag Ice $1.75 TOTAL TOTAL $19.50 10 tubes $5.00 mix $19.50 $8.67 Day 2 - Weather was normal Starting Inventory: cash = $56.8, pitchers = 1 @ $3.25, mixing spoons = 1 @ $2.50, Cups = 86 @ $2.58, Tubes of lemonade mix = 5 @ $2.50. Purchases charged today are 10 Tubes of lemonade mix @ $5.00, 1 Bags of ice @ $1.75. Today sales = $20.80 (52 @ 0.4) out of 93 in 3.75 hours. Inventory used 67 Cups value at $2.01, 10 Tubes of lemonade mix value at $5, and 1 bag of ice value at $1.75. Ending cash was $77.60 and the store balance was $26.25. DAY 2 Starting Balance Starting Inventory Purchase Charges Today sales Out of Inventory used Ending cash Ending balance $56.80 1 Pitcher 1 Spoon $3.25 10 Tube $2.50 Mix $2.58 1 Bag ice 5 Tube Mix $2.50 TOTAL 86 Cups $5.00 52 cups * .40 = $20.80 $1.75 93 / 3.75= 0.04 per 67Cups $2.01 hour 10 Tubes $5.00 mix $6.75 1 Bag ice $1.75 $77.60 $26.25 TOTAL $10.83 TOTAL $8.76 Day 3 - Weather was sunny Starting Inventory: cash = $77.60, pitchers = 1 @ $3.25, Mixing spoons = 1 @ $2.50, Cups = 19 @ $0.57, Tubes of lemonade mix = 5 @ $2.50. Purchases charged today are 150 Cups @ $4.50, 15 Tubes of lemonade mix @ $7.50, 1 bag of ice @ $1.75. Today sales = $28.00 (56 @ 0.5) out of 105 in 3.5 hours. Inventory used 64 Cups value at $1.92, 10 tubes of lemonade mix value at $5, 1 bag of ice value at $1.75. Ending was $105.60 cash and the store balance was $40.00. DAY 3 Starting Balance Starting Inventory Purchase Charges Today sales Out of Inventory used Ending cash Ending balance $77.60 1 pitcher $3.25 150 cups 1 spoon $2.50 15 tubes $.57 mix 19 cups 5 tube mix $2.50 1 bag ice Total $8.82 Total $4.50 56 cups * .50 = $28.00 $7.50 105 / 3.50= 0.033 64 cups $1.92 per hour 10 tubes $5.00 mix $1.75 Total $40.00 1 bag ice $1.75 $13.75 $105.60 $8.67 Day 4 - Weather was normal Paid store charge account balance of $40.00. Starting Inventory: cash = $65.60, pitchers = 1 @ $3.25, mixing spoons = 1 @ $2.50, cups = 105 @ $3.15, tubes of lemonade mix = 10 @ $5.00. Purchases charged today are 15 tubes of lemonade mix for $7.50, 1 bag of ice for $1.75. Today sales = $31.2 (52 @ 0.6) out of 100 in 4.75 hours. Inventory used 63 cups value at $1.89, 10 tubes of lemonade mix value at $5.00, 1bag of ice value at $1.75. Ending cash was $96.8 and the store balance was $9.25 DAY 4 Starting Balance Starting Inventory Purchase Charges Today sales Out of Inventory used Ending cash Ending balance $40.00 1 pitcher 1 spoon $3.25 15 tubes $2.50 mix $3.15 1 bag ice 10 tube mix $5.00 TOTAL 105 cups TOTAL $7.50 52 cups * .60 = $31.20 $1.75 100 / 4.75= 0.048 63 cups $1.89 per hour 10 tubes $5.00 mix $9.25 1 bag ice $1.75 TOTAL $13.90 $96.80 $9.25 $8.64 Day 5 - Weather was normal Starting Inventory: cash = $96.8, pitchers = 1 @ $3.25, mixing spoons = 1 @ $2.50, cups = 42 @ $1.26, tubes of lemonade mix = 15 @ $7.50. Purchases charged today are 1 pitcher @ $3.25, 150 cups @ $4.50, 5 tubes of lemonade mix @ $2.50, 2 bags of ice for $3.50. Today sales = $40.80 (68 @ 0.6) out of 125 in 5 hours. Inventory used 83 cups value at $2.49, 14 tubes of lemonade mix value at $7.00, 2 bags of ice value at $3.50. Ending cash was $137.60 and the store balance was $23.00. DAY 5 Starting Balance Starting Inventory Purchase Charges Today sales $96.80 1 pitcher $3.25 1 pitcher 1 spoon $2.50 150 cups 43 cups $1.26 5 tubes mix $2.50 $3.25 68 cups * .60 = $40.80 $4.50 Out of Inventory used Ending cash Ending balance 125 / 5.00= 0.04 per hour 83 cups $2.49 $137.60 $23.00 14 tubes $7.20 mix 15 tube mix $7.50 2 bag ice $3.50 1 bag ice $3.50 TOTAL $13.75 TOTAL $13.19 $14.51TOTAL Day 6 - Weather was normal Starting Inventory: cash = $137.6, pitchers = 2 @ $6.50, mixing spoons = 1 @ $2.50, cups = 109 @ $3.27, tubes of lemonade mix = 6 @ $3.00. Purchases charged today are 25 tubes of lemonade mix for $12.50, 2 bags of ice for $3.50. Today sales = $48.3 (69 @ 0.7) out of 132 in 4.75 hours. Inventory used 74 cups value at $2.22, 13 tubes of lemonade mix value at $6.50, 2 bags of ice value at $3.50. Ending cash was $185.90 and the store balance was $39.00. DAY 6 Starting Balance Starting Inventory Purchase Charges Today sales Out of Inventory used Ending cash Ending balance $137.60 2 pitchers $6.50 1 spoon $2.50 109 cups $3.27 6 tube mix $3.00 TOTAL $15.27 Evaluation Weather Day Starting Balance Starting Inventory Purchase Charges Today Sales Out Of Inventory Used Ending Cash End Balance 1 Normal $40.00 $0 $19.50 $16.80 0.043 $8.67 $56.80 $19.50 2 Normal $56.80 $10.83 $6.75 $20.80 0.04 $8.76 $77.60 $26.25 3 Sunny $77.60 $8.82 $13.75 $28.00 0.033 $8.67 $105.60 $40.00 4 Normal $40.00 $13.90 $9.25 $31.20 0.048 $8.64 $96.80 $9.25 5 Normal $96.80 $14.51 $13.75 $40.80 0.04 $13.19 $137.60 $23.00 6 Normal $137.60 $15.27 $16.00 $48.30 0.036 $12.22 $185.90 $39.00 Total Total $448.80 $63.33 $79.00 $185.90 $0.24 $60.15 $660.30 $157.00 1-6 days Average $74.80 $12.67 $13.17 $30.98 $0.04 $10.03 $110.05 $26.17 What do these statements tell you about the operation? The statements are useful in a multitude of ways; they are indicative on whether the assets are worth the investment and reflect the daily debt and revenue occurrences. With this information the lemonade stand owners can see the ebb and flow of business in relation to the weather. As it portrays, the sunniest day (Day 3) did not produce more revenue than the average day which has to force the owners to find other variables that might show why sales were down. However, these statements allow the owners to see the daily balance with the outputs and inputs and show percentages. Additionally, these statements keep track of the inventory so they know if any particular item is being misused. Can you make any recommendations? I would look for other variables to find out why on a sunny day sales were not as high as the average day. I would recommend that the owners market their stands and possible offer deal, i.e. get free lemonade after the purchase of 10. Brownfield, D. L.. (2007). MBA essentials. New York : McGraw-Hill Learning Solutions. ISBN: 978-0-697-77527-6) ... View Full Document

End of Preview

Sign up now to access the rest of the document