Group California

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1. How might Hynes and the investors use the profit plan in managing the business?
The prepared profit plan contains sales, cost, and profit targets. The targets serve as guides to managing expenses and sales objectives.
2. How might the projected transactions impact the company’s balance sheet?
The company has projected current assets over current liability ratio of 4.25 which means that the company is more than capable to pay its responsibilities. Also the company has an ROI of 4 years.

3. Prepare a profit plan in the form of an income statement for the first year of operations.
Dispensers of California Inc
Income Statement
1st year operation

RE
598,500.00

Expenses

Incorp cost
2,500
re design
25,000
Interest payable
500
Manufacturing Payroll
145,000
Other manufacturing cost
62,000
Selling, general, and admin costs
63,000
Cost of sales
196,900
Eqpt depreciation
8500
Patent cost
20000
Cash dividends
5,000
Taxes
22,500

550,900

net income
47,600.00

4. Prepare a balance sheet as of the end of the 1st year of operations
Dispensers of California Inc
Balance sheet
1st year of operation

Current assets

Current Liabilities

Cash
208,500.00

AP

AR
-

Bank loan
30,000.00
Inventory
15,100.00

Taxes Payable
22,500

223,600.00

52,500.00

Noncurrent assets

Shareholder's equity

Equipment
85,000.00

Paid in cap
200,000.00
Less depriciation
8,500

Retained earnings
52,600.00

76,500.00

Less dividends
5,000.00

247,600.00

Total assets

Total liabilities and shareholder's equity

300,100.00

300,100.00

5. Hynes made a number of accounting decisions. Do you agree with these decisions?
The accounting decisions that he made are:

• He...
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