Week 2 Hw

Topics: Generally Accepted Accounting Principles, Balance sheet, Corporate tax Pages: 1 (272 words) Published: August 23, 2013
Ch. 3
#1(A). I would advise Mr. Young to organize his new venture as a LLC. In organizing his venture as a LLC, Mr. Young would be able to gain financing through venture investors or by equity offerings. This would reduce his personal costs and allow for greater allocation of resources. An LLC would also limit his personal liability compared to a sole proprietorship as only his personal investments into the organization would be liable/exposed and not any personal assets. One of the most important positives with a LLC is no double taxation as is the case with the corporation organization. Similar to the sole proprietorship, the taxes would be at the personal rate. #1(B). Mr. Young can protect his intellectual property by: obtaining patents on his inventions , trademarks on any logos or designs and through Trade secrets to protect his ideas and information that is not generally known to the public.

Ch. 5
8. a. Inv-Sale = Ave. Inventories
(CGS / 365)
( (500k+400k)/2 ) / (900k/365) = 182.5 days
b. Sales – Cash = Ave Receivables
(Net Sales/365)
=( (280k+200k)/2 ) / (1.5M/365) = 58.4 days
C. Purchase-Pmt = Ave Payables + Ave Accrued Liabilities
(COGS / 365)
= (160k+130k)/2+(70k+50k)/2 / (900k/365) = 83.1
D. CCC= 182.5 + 58.4 – 83.14 = 157.8
9. a
| 2009| 2010|
Net Sales| $900,000 | $1,500,000 |
Net Income| ($65,000)| $75,000 |
NPM| -7%| 5%|
Sales-TA ratio = Net Sales/ Avg Total Assets= $1.5M/($1m+$1.2M/2) = 1.36 times b. 2010 ROA = Net Profit ($75k) / Avg. TA ($1.2M+$1.0M/2) = 7%
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