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Revise financial statement and do adjusting entrie...

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Revise financial statement and do adjusting entries The manager John: ?We've written off $27000 in accounts receivable to bad debts during the past year. We still have $12,300 over 60?days old and $1,500 more is in the courts. Our accounts are slow by good, and this slows down our cash flow. Our biggest customer pays us in 45 days; they're 40 percent of our total receivables. That 'other accounts receivable' is a personal loan I took out for my car. One? third of our raw?materials inventories are not being utilized; we bought this material in advance because the price was going up; we may use it later in the year. We've got good profit possibilities in that power?tool?housing job; that should keep us running and making money until the end of the fiscal year on November 31, 2011. That other asset, the mold?we built that for a guy who never picked it up. It's an one?of?a?kind job. The termination claim for breach of contract is in the courts. That accrued liability is a note we owe another supplier for material which we purchased last year. We want to use your material, but we've got to have open credit; our cash flow is too slow for COD. Go along with us and we'll push 250,000 pounds of volume your way at $1.00 per pound for the power?tool?housing job. If you don't, we'll have to buy the material elsewhere. Our sales volumes running 40 percent from a mold manufacturer and 60 percent from injection molder of plastic products. Because of the large number of molders and the relatively low number of manufacturers, plastic molding is a very competitive, marginally profitable venture. Most plastic molders have cash flow problems, and commonly pay in 50 days; terms of sale for raw plastic are 30 days. We shows a sporadic payment record in the industry, paying suppliers in anywhere from 50 to 150 days. During the last year, we bought $6,700 from Plastic Supplier, Inc., and paid in 120 days. Manufacturers use many molders and can obtain quantity discounts by buying for all of the molders at once.? The sales department of Chemical Products has advised John that they are very interested in selling to the account. Profit margins are 20 percent on the product that John? company wants to buy. Recently, several accounts, to which John elected not to grant credit, have gone to competitors and have not defaulted. The salesman considers Blue Tie John will pay up eventually. May 31, 2010 Six?Month, Unaudited Financial Statement Current assets Cash in bank $ 3,241 Accounts receivable Trade (pledged) 119,284 Other 10,110 Total accounts receivable 129,394 Inventories Raw materials 99,990 Tooling 37,800 Finished parts 81,642 Total inventories 219,432 Total current assets $352,067 Other assets Termination claim 45,645 Mold 27,424 Total other assets 73,069 Fixed assets Equipment less depreciation 315,980 Total fixed assets 315,980 Total assets $741,121 Current liabilities Notes payable (secured) $92,198 Accounts payable 112,309 Accrued liabilities 45,668 Current portion of S.B.A.loan 37,500 Total current liabilities $287,875 Other liabilities Customer deposits 48,750 Total other liabilities 48,750 Long?term liabilities S. B.A. loan (secured by fixed assets) 314,948 Total long?term liabilities 314,948 Owner?s equity Capital stock 27,000 Retained earnings 62,548 Total owners' equity 89,548 Total liabilities and owners' equity $741,121 Unaudited Income Statement Sales $584,652 Cost of goods sold 482,718 Gross margin on sales 101,934 Selling and administrative expenses 51,060 Interest expense 13,839 Profit before taxes $ 37,035

 

Paper#2212 | Written in 18-Jul-2015

Price : $25
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