Week1_Accounting_Assignment

Week1_Accounting_Assignment - E1-3. The Long Run Golf &...

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Accounts payable and accrued liabilities a) liability (L) b) operating activity (O) Accounts receivable a) asset (A) b) operating activity (O) Property, plant, and equipment a) asset (A) b) investing activity (I) Food and beverage operations revenue a) revenue (R) b) operating activity (O) Golf course operations revenue a) revenue (R) b) operating activity (O) Inventory a) asset (A) b) operating activity (O) Long term debt a) liability (L) b) financing activity (F) Office and general expense a) expense (E) b) operating activity (O) Professional fees expense a) expense (E) b) operating activity (O) Wages and benefits expense a) expense (E) b) operating activity (O) P1-3A part (a) ________________________________________________________________________ Eckersley Service Company Income Statement
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For the period June 1, 2011 to June 30, 2011 Revenues Sales Revenue $7000 Expenses Wage expense $1400 Supplies expense $1000 Gas and Oil expense $ 600 Advertising expense $ 400 Utilities expense $300 Total Expenses $3700 Net Income $3300 __________________________________________________________________________ Eckersley Service Company Retained Earnings Statement For the period June 1, 2011 to June 30, 2011 Retained earnings, June 1 $ 0 Add: Net Income $3300 Less: Dividends $2000 Retained earnings, June 30 $1300 ____________________________________________________________________________ Eckersley Service Company Balance Sheet June 30, 2011 Assets Cash $4600 Accounts Receivable $4000 Supplies $2400 Equipment $29000
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Total Assets $40000 Liabilities and Stockholders' Equity Notes payable $12000 Accounts payable $500 Total Liabilities $12500 Stockholder's Equity Common Stock $26200 Retained earnings $1300 Total stockholders' equity $27500 Total liabilities and Stockholders' Equity $40000 _____________________________________________________________________________________ P1-3A – part (b) I think that the company's first month was pretty successful for a new company. The company had sales of $7000 in the first month of business, but more importantly, had a net income of $3300 on those sales, which is a 47% return on revenue with an advertising budget of only $400. If you assume business growth and an eventual lowering of fixed costs as loans get repaid and retained earnings accumulate, the business could very well be profitable. P1-3A – part (c) The company's decision to distribute a dividend is puzzling, and probably a pretty poor business decision if you take everything into account. Most investors would prefer growth in retained earnings, and a quicker repayment of any notes, and I would also think that most investors would not expect a fledgling
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Week1_Accounting_Assignment - E1-3. The Long Run Golf &...

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