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Jumpin Jehosa Phats Question




Question;You are an accountant and have two clients you?ll be dealing with during this assignment. JumpinJehosaPhats is ahaberdashery(Google it!), and is owned by J.J. Phats. JJ is expanding the company and is in need of advice. He has come to you to discuss the future of the company.;Part 1 ? Incorporating (25% of grade);Discuss in detail the requirements of incorporating the business, the advantages and disadvantages, and provide JJ with recommendations.;Part 2 ? Account Prep (25% of grade);Using the data provided, create the owner?s equity accounts and the shareholder?s equity section of the balance sheet after the incorporation of JumpinJehosaPhats.;Part 3 ? Expansion Considerations (25% of grade);JJ is in need of raising money to expand the company and has identified the methods that he is considering. Using the information provided, calculate any burden to the corporation and provide recommendations to JJ concerning his options.;Part 4 ? Cash Flow (25% of grade);Your second client, Bailey?s Chocolates, is asking you to produce a Cash flow from Operating Activities. Using the Indirect Method and the information provided, calculate the cash flow from Operating Activities.;Be sure to cite your resources and include supporting calculations and evidence to support your positions.;JumpinJehosaPhats is a small business owned by JJ Phats as the sole proprietor. JJphats is incorporating the business.;On January 1, 2012 JumpinJehosaPhats Inc. has been authorized to issue 1,000,000 common shares with a Par Value of $1. In the process of incorporating, the sole proprietor owner?s equity accounts must be closed and the equity must now reflect a corporate stockholders? equity account.;The books for the Sole Proprietorship indicate the following;JJ Phats deposited $35,000 to start JumpinJehosaPhats;JJ Phats contributed $50,000 of equipment to start JumpinJehosaPhats;Retained Earnings December 31, 2011 = $150,000;Prepare the Stockholder?s Equity Portion of the Balance Sheet on January 1, 2012.;Part 3;JumpinJehosaPhats was incorporated on January 1, 2012 and a year later it needs $10,000,000 to expand operations. JJ Phats is the sole shareholder of the corporation.;The corporation is considering three methods to raise the capital;? issuing common shares at FMV;? issuing preferred stock with par = $1000;? issuing 10 year bonds with par = $1000;You have been hired to determine the best way for the company to obtain the funds needed which might be a single method or combination of methods. Using the following information, discuss the pros and cons of each method and provide necessary calculations to support the position you recommend.;? The company is authorized to issue 1,000,000 shares with a par value of $1.00;? On January 1, 2013 an appraisal of the company indicates that it has a current value of $25,000,000.;? On January 1, 2013 current interest rates are 3.5% APR and rising.;? On December 1, 2012 the competition (LeapinLizards Inc) issued 10,000 ten year cumulative preferred shares with par = $1000 at 3.4%;Part 4 ? Cash Flow;Your second client, Bailey?s Chocolates, is asking you to produce a Cash flow from Operating Activities. Using the Indirect Method and the informationprovided, calculate the cash flow from Operating Activities.


Paper#25199 | Written in 18-Jul-2015

Price : $50