Your Great Aunt Mildred has been knitting for as long as you can remember. She's created...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Your Great Aunt Mildred has been knitting for as long as you can remember. She's created scarves, blankets, hats, and even winter socks. She's currently thinking about turning her hobby into a full blown business, but she knows nothing about where or how to get started. She isn't even sure if anyone would be interested in her knitted goods. She has contacted you to help her make sense of everything, because she knows you are a dedicated Accounting student. Please help your Great Aunt Mildred answer her questions. Please complete parts 1-4 in a Word document and part 5 in an Excel document. For further project guidelines and requirements (including proper grammar and spelling-5 points), refer to the project grading rubric. 1. I'd like to submit the paperwork for my new business, but I'm not sure what type of business I should form. Can you please explain at least two advantages and two disadvantages of a sole proprietorship, partnership, and corporation for me? Also, which type of business do you suggest I form and why? (9 points) 2. When I called the bank, they kept using these terms like operating, investing and financing, but really didn't have time to explain them to me. Can you please define each of these terms and give an example of how each one would apply to my knitting business? (9 points) 3. I'm not sure I'm cut out for the business world! Apparently there's some equation that I'm supposed to learn in Accounting, but I just can't keep the elements straight, and honestly I still don't know the differences between them anyway! Can you explain to me all three main elements of the accounting equation and at least two types of accounts that would fall into each element? (15 points) 4. The bank says that the only way I can receive a loan is to present financial statements to them, but I've never created anything more than a bank deposit slip before! Can you explain each of the four financial statements to me (in proper order) and tell me how they are all interrelated? Can you also explain the differences between current and long-term and how those concepts relate to the elements in the financial statements? (15 points) 5. In order to prepare for the presentation of financial statements for the bank, I knitted a bunch of items and sold them at the local flea market the last few weekends. It was so great to see everyone out there shopping around. I didn't think so many people were interested in knitted key chains! I kept track of all the cash I spent and all the cash I collected and I was hoping you could create the financial statements for me. I apologize the information isn't organized very well...I'm just not sure what you're looking for. Using the information below, complete the Income Statement, Statement of Retained Earnings, and Balance Sheet for your Aunt Mildred. Be sure to include proper headers, dates, and account titles (reference page 1-29 in your textbook for proper formatting). Lastly, in the column next to each of Aunt Mildred's accounts below, list out what type of business activity (operating, investing, financing, or N/A) the account would fall into on the Statement of Cash Flows, if any. (chart-12 points, statements-35 points) Account Accounts Payable Accounts Receivable Cash Display Board Expense Furniture Inventory Owner's Capital Revenue Space Rental Expense Supplies Expense Truck Rental Expense Unearned Revenue Other Important Information: . . . Amount $ 112 50 1,650 30 125 62 1,000 1,570 45 695 60 35 Business Activity I started my business on June 2nd by investing my own cash. I paid cash for this great piece of furniture (reclining chair) to use while I knit! All of my expenses were paid in cash and all the money I received from my customers was in cash. Reminder: There is no common stock or dividends for Aunt Mildred's knitting business...yet! Your Great Aunt Mildred has been knitting for as long as you can remember. She's created scarves, blankets, hats, and even winter socks. She's currently thinking about turning her hobby into a full blown business, but she knows nothing about where or how to get started. She isn't even sure if anyone would be interested in her knitted goods. She has contacted you to help her make sense of everything, because she knows you are a dedicated Accounting student. Please help your Great Aunt Mildred answer her questions. Please complete parts 1-4 in a Word document and part 5 in an Excel document. For further project guidelines and requirements (including proper grammar and spelling-5 points), refer to the project grading rubric. 1. I'd like to submit the paperwork for my new business, but I'm not sure what type of business I should form. Can you please explain at least two advantages and two disadvantages of a sole proprietorship, partnership, and corporation for me? Also, which type of business do you suggest I form and why? (9 points) 2. When I called the bank, they kept using these terms like operating, investing and financing, but really didn't have time to explain them to me. Can you please define each of these terms and give an example of how each one would apply to my knitting business? (9 points) 3. I'm not sure I'm cut out for the business world! Apparently there's some equation that I'm supposed to learn in Accounting, but I just can't keep the elements straight, and honestly I still don't know the differences between them anyway! Can you explain to me all three main elements of the accounting equation and at least two types of accounts that would fall into each element? (15 points) 4. The bank says that the only way I can receive a loan is to present financial statements to them, but I've never created anything more than a bank deposit slip before! Can you explain each of the four financial statements to me (in proper order) and tell me how they are all interrelated? Can you also explain the differences between current and long-term and how those concepts relate to the elements in the financial statements? (15 points) 5. In order to prepare for the presentation of financial statements for the bank, I knitted a bunch of items and sold them at the local flea market the last few weekends. It was so great to see everyone out there shopping around. I didn't think so many people were interested in knitted key chains! I kept track of all the cash I spent and all the cash I collected and I was hoping you could create the financial statements for me. I apologize the information isn't organized very well...I'm just not sure what you're looking for. Using the information below, complete the Income Statement, Statement of Retained Earnings, and Balance Sheet for your Aunt Mildred. Be sure to include proper headers, dates, and account titles (reference page 1-29 in your textbook for proper formatting). Lastly, in the column next to each of Aunt Mildred's accounts below, list out what type of business activity (operating, investing, financing, or N/A) the account would fall into on the Statement of Cash Flows, if any. (chart-12 points, statements-35 points) Account Accounts Payable Accounts Receivable Cash Display Board Expense Furniture Inventory Owner's Capital Revenue Space Rental Expense Supplies Expense Truck Rental Expense Unearned Revenue Other Important Information: . . . Amount $ 112 50 1,650 30 125 62 1,000 1,570 45 695 60 35 Business Activity I started my business on June 2nd by investing my own cash. I paid cash for this great piece of furniture (reclining chair) to use while I knit! All of my expenses were paid in cash and all the money I received from my customers was in cash. Reminder: There is no common stock or dividends for Aunt Mildred's knitting business...yet!
Expert Answer:
Answer rating: 100% (QA)
To calculate the ending inventory value and the cost of ... View the full answer
Related Book For
Posted Date:
Students also viewed these accounting questions
-
Explain why an investor would be interested in a companys debt ratio.
-
What kinds of enterprises would be interested in hiring a KaosPilot as an employee? What skills, knowledge, and attitudes would a KaosPilot bring to the organization?
-
Identify at least two advantages and two disadvantages of using color to visually represent information.
-
Sandys Socks makes the worlds best socks. Information for the last eight months follows: Prepare a scatter graph by plotting Sandys data on a graph. Then draw a line that you believe best fits the...
-
Explain why an analyst needs to understand how people think, how they learn, how they react to change, how they communicate, and how they work.
-
A model fit predicting preference for U.S. President (Democrat, Republican, Independent) using x = annual income (in $10,000) is log( D / 1 ) = 3.3 0.2x and log( R / 1 ) = 1.0 + 0.3x. a. Find the...
-
What are the advantages and disadvantages of certified environmental product declarations? Assuming that you are the environmental manager of Global Autos, with companies operating in Sweden,...
-
Starbucks Corporationlike all other businessesmakes adjusting en-tries at year- end in order to measure assets, liabilities, revenues, and expenses properly. Examine Starbucks Corporations Balance...
-
Your program has had problems with system link-up and connectivity off and on for the past month. While there are no customer complaints to date, sales have some concern with the accuracy of the...
-
Forecasting with the Parsimonious Method and Estimating Share Value Using the ROPI Model Following are income statements and balance sheets for Cisco Systems. Cisco Systems Consolidated Statements of...
-
Are you in favor of the retreat doctrine as it relates to self defense (justification) or do you believe some other rule should control . (Be specific and give reasons/examples.)
-
Calculate the price an American call option on a non dividend paying stock with the information below. Stock price is $40 Exercise price is $38 Risk free rate is 5% Volatility is 20% Six months to...
-
Johnson, Inc. has 4.0 million shares of common stock outstanding and is subject to a corporate tax rate of 21 percent. The firm currently has no debt. The expected annual earnings before taxes of...
-
Analyze the accounting issues raised by the Enron case. If you knew about these facts before they became public, what, if anything, would you have done? What does this case demonstrate about the...
-
Magnetis Inc. has annual sales of $12 million, its cost of goods sold is 75% of annual sales, it carries an average inventory of $800,000 and its average collection period is as long as its inventory...
-
A company has a current market value of $65 per share with earnings per share of $4.32. What is the net present value of its growth opportunities if the required rate of return is 8 percent? A bakery...
-
You are hired to determine eligibility of an applicant for auto insurance company. Using JavaScript, you are to makea console-based application as per the specifications below. At the top of your...
-
Use nodal analysis to determine voltages v1, v2, and v3 in the circuit Fig. 3.76. Figure 3.76 4 S 3i, 2 A 4A
-
Why should a small business make stronger efforts to achieve sustainability?
-
Well, okay, then, Grant conceded. Maybe I wont discontinue credit, but what can I do to take care of the problems Im having? What can Roy tell Grant?
-
Identify the business you would like to own. Go to the OSHA web site and find out what rules and regulations apply to this business. Create a chart of hazards of this business and the applicable OSHA...
-
On 6 August 2023, Danh (who is not a Scottish taxpayer) commenced self-employment as a sole trader. In addition, on 6 September 2023, he joined an existing partnership run by Ebele and Fai. The...
-
Dee commenced in self-employment on 6 April 2021. She initially prepared accounts to 5 April, but changed her accounting date to 31 July by preparing accounts for the four- month period to 31 July...
-
In May 2023 Bernard, a self-employed plumber, and his son Gerald, a self-employed electrician, purchased 1,000 empty barrels from a Scottish whisky distillery. The barrels were over 100 years old and...
Study smarter with the SolutionInn App