Case 1-1 Ribbons an’ Bows, Inc

1444 words 6 pages
Table of Contents
Issues 1
Facts 1
Analysis 3 Question 1 3
a. Report on the three-month operation of Ribbons an’ Bows, Inc. 3
b. Profit of the Company 4
c. The reason for the cash in the bank decline 5 Question 2 6 Question 3 8
Conclusions 9

Issues 1. a How would you report on the three-month operations of Ribbons an’ Bows, Inc., through June 30? b Was the company profitable? (Ignore income taxes.) c Why did its cash in the bank decline during the three-month operating period? 2. How would you report the financial condition of the business on June30, 2010? 3. Do you believe Carmen’s first three months of operation could be characterized as “successful”? Explain your answer.
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It is obvious that the cost of sales only $2,100 less than the increasing inventories paid by cash $2,900. So the cash in the bank decline during the three month operation period.
Question 2
Assets incorporate current assets and noncurrent assets. They including owed $320 by a transaction for ribbon arrangements, on hand inventories, unused supplies $20, prepaid expense $1200 for the last two month, cash deposit $ 250, net computer $1.750 and net-sewing machine$1,740. Liabilities include owed employed $90 and owed cousins’ interest $200. Carmen’s equity included the investment of $1000 and retained earnings $1,480.
Carmen had not paid herself as salary or dividends during the four months of operations. Her salary is not a liability and an expense in business transaction. So the company should not pay her any compensation for the past four month.
The follow of the balance sheet of Ribbons an’ Bows, Inc., presents the financial condition of the business on June 30, 2010. Ribbons an’ Bows, Inc.
Balance sheet
As of June 30, 2010
Current assets:
Current cash $3,390
Accountable receivable $320
Inventory $4,100
Supply $20
Prepaid rent $1,200
Cash register deposit $250 Noncurrent