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Butler Lumber Company Analysis

Based on the information and corresponding financial statements provided, we concluded that: Bulter Lumber Company has to collect money from outside resources to compensate its funding gap of 383,000 USD. From the perspective of banker, we won’t approve Mr.Butler ‘s loan request From the perspective of firm’s financial advisor, it is better to finance from new shareholders than to borrow from bank. II. Analysis i. Funding gap There are three main reasons why Butler Lumber Company has to finance itself through outside resources. Firstly, It was mentioned in the document that Butler is offered a trade discount by suppliers, which is 2/10 with 30 days span of due. However, Mr. Bulter had never been able to use such a discount…

Advanced Accounting by Guerrero

Chapter 1 Multiple choice answers and solutions 1-1: a Jose’s capital should be credited for the market value of the computer contributed by him. 1-2: b(40,000 + 80,000)  2/3 = 180,000 x 1/3 = 60,000. 1-2: c 1-3: a CashP100,000 Land300,000 Mortgage payable( 50,000) Net assets (Julio, capital)P350,000 1-4: b Total Capital (P300,000/60%)P500,000 Perla’s interest ______40% Perla’s capitalP200,000 Less:Non-cash asset contributed at market value LandP 70,000 Building90,000 Mortgage Payable( 40,000)_120,000 Cash contributionP 80,000 1-5: d- Zero, because under the bonus method, a transfer of capital is only required. 1-6: b ReyesSantos CashP200,000P300,000 Inventory–150,000 Building–400,000 Equipment150,000 Mortgage payable________( 100,000) Net asset (capital)P350,000P750,000 1-7: c AABBCC CashP 50,000 Property at Market ValueP 80,000 Mortgage payable( 35,000) Equipment at Market Value______________P55,000 CapitalP…

Case Study 08-1: Go With the Flow

$20 million were received from the insurance carrier as reimbursement for a building. The money will be used for the pension plan instead of rebuilding the facility. Sale of Accounts Receivable The Company sold $11million of its accounts receivable and got cash and beneficial interest in the transferred receivables. “The company uses the “financing technique” to reduce more expensive bank debt, because the interest cost on the securization financing is less than the company can get on their bank debt” (Case 08-1). Company must pay down the debt with the proceeds. The sold receivables are not reflected in the accounts receivable balance in the company’s balance sheet. Acquisition of Property, Plant, and Equipment Account $12 million of capital expenditures were…

Acct Chapter 13, lecture #1

Break question – Chapter 13, lecture #1 Wilk Co. reported the following liabilities at December 31 of the current year: Accounts Payable – trade 750,000 Short-term borrowings 400,000 Bank loan, current portion $100,0003,500,000 Other bank loan1,000,000 The bank loan of $3,500,000 was in violation of the loan agreement. The creditor had not waived the rights for the loan. Half the other bank loan will mature on June 30 next year, and the other half in the year following. Interest on the other bank loan is not included in the above figures. Interest of $75,000 was paid on June 30 of the prior year along with an installment on the loan principal, and interest of $50,000 will be paid with the…