Anthony Case 1-2: Kim Fuller
1. In order for Kim Fuller’s plastic bottle grinding business to get off the ground she will need to manage the business with non-accounting and accounting information. The following information to run the business is non-accounting information, as it is not owned by the company did not occur through a monetary transaction: 2 grind machine workers, 1 truck drive, 1 accountant, and the 2 contracts with bottling companies. The remaining information is categorized as accounting information, as it is owned by the company, may provide future economic resource, and occurred through a transaction: 1 used truck, 2 trailers, 1 used grinding machine, 1 new grinding machine, 1 new computer, 1 warehouse, 3 investors’ deposits, 1 mortgage loan, and the owner’s initial investment into the company. 2. Below is the beginning balance sheet for Kim Fuller’s Business. a.)
[pic]b.) To address the question of how Fuller should go about putting a value on the company’s assets, she must utilize the generally accepted accounting principles (GAAP) regarding the worth of her assets. Specifically through these principles, Fuller will be able to determine the fair value or cost of each asset – as a transaction occurred for each purchased item of equipment. Additionally, she will be able to add the value of the Warehouse based on the value at the time of her purchase. Through associating a cost with each, Fuller can easily determine the company’s assets. c.) Based on the balance sheet at the onset of the business, the Owners’ Equity is valued at $165,000.
3. Once Fuller begins to make her sales she will need to determine her revenues and expenses, as she will acquire inventory and the sell the goods for monetary value, which generates revenue. In order for Fuller to stay on top of her accounting for these revenues and expenses, which are also known as “profits and loss”, the business should utilize an income statement. This will allow the business to determine the net income of the business, which filters in to the balance sheet through the retained earnings – underneath owners’ equity. It is advisable for Fuller to begin with an income statement weekly until she grasps the concept of accounting. Later on she can move it out to bi-weekly updates, and eventually even out to monthly – if the revenue stream is slower.
Anthony Case 2-3: Lone Pine Café
1. Balance sheet for Loan Pine Café as of November 2, 2005. [pic]2. Balance sheet for Loan Pine Café as of March 30, 2006. [pic]3. I believe that the partners would not have been able to receive their proportional share of the Owners’ Equity, as they would forfeit their rights to the business with the theft of assets (cash register and contents). Therefore, the entire Owners’ Equity to be earned would fall upon Mrs. Antoine, the lone remaining partner of the business.