Dog Concierges Llc

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Views: 308

Words: 470

Pages: 2

Category: Business and Industry

Date Submitted: 09/12/2012 08:54 AM

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For the full scale understanding of a company’s operation, managers and investors need to review several records. Normally, the most important three of them are income statement, cash flow, and balance sheet. They show the transactions direction, dollar amount, and their affection.

In this case, assume everything of the company is running well. One problem is the information provided by Jeff, a crash learner of finance and accounting, is too general. I think he should records more specific events in the statements to shows how the cash come and go, and explain the capital structure clearly. As Jennifer remind that “building” and “retained earning” items require some special handling. We can see this company has good statue in operating cash flow but the investing and financing cash flows are big negative. Although it shows the business is expanding, the decrease of cash reserve is not a good sign for investor, it means that company might disability to catch good opportunity or face unforeseen trouble. So I suggest Jeff to explain the fund using specifically to let people know the good perspective of company through the statements. It is responsibility, also is delivery skill of psychology.

Next is Jeff’s homework:

1. Sold capital stock for $15,000 to three investors.

Credit $15,000 in cash, debit $15,000 in common stock.

2. Purchased $55,000 of product raw material on account from suppliers.

Credit $55,000 in raw material, debit $55,000 in account payable.

3. Sold products for $40,000 cash that had cost $29,000 to make.

Credit $40,000 in cash, debit good for $29,000 and $11,000 in profit.

4. Borrowed $30,000 from the bank, due in 120 days, with an interest rate of 6%.

Credit $30,000 in cash, debit $30,000 in note payable.

5. Collected a $4,500 account receivable from a veterinarian customer.

Credit $4,500 in cash, debit $4,500 in account payable.

6. Bought a used pickup truck for $8,000 cash.

Credit $8,000 in...