FINANCIAL ACCOUNTING:TOOLS FOR BUSINESS
19th Edition
ISBN: 9781119493624
Author: Kimmel
Publisher: WILEY
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John Snow has recently retired, and he received a large lump sum settlement from his employer. He would like to invest this money to achieve a stable long term income. He is considering investing in the following two companies:
Allied Grocers (AG) are a 3-year-old online grocery retailer that specializes in delivering a wide selection of quality food products through an online platform.
Beta Solutions (BS) is an established 10-year-old electronics company that is known for selling the most innovative electronic products and software solutions.
Selected financial data for 2019
AG
BS
Average total assets
1,500,000
4,000,000
Average # of common shares outstanding (no preferred shares)
10,000
10,000
Dividends paid
10,000
50,000
Current Market price per share
$95
$165
Net sales
1,300,000
6,300,000
Cost of goods sold
900,000
4,200,000
Gross profit
400,000
2,100,000
Operating Expenses:
Administrative…
Natalie and her friend Curtis Lesperance decide that they can benefit from joining Cookie Creations and Curtis's coffee shop. In the
first part of this problem, they come to you with questions about setting up a corporation for their new business.
Curtis has operated his coffee shop for 2 years. He buys coffee, muffins, and cookies from a local supplier. Natalie's business consists
of giving cookie-making classes and selling fine European mixers. The plan is for Natalie to use the premises Curtis currently rents to
give her cookie-making classes and demonstrations of the mixers that she sells. Natalie will also hire, train, and supervise staff to bake
the cookies and muffins sold in the coffee shop. By offering her classes on the premises, Natalie will save on travel time going from one
place to another. Another advantage is that the coffee shop will have one central location for selling the mixers.
The current market values of the assets of both businesses are as follows.
Curtis's…
Throughout this book, we will present a continuing narrative about Harry and Belinda Johnson. Following is a brief description of the lives of this couple.Harry is 28 years old and graduated five years ago with a bachelor's degree in interior design from a large Midwestern university near his hometown in Indiana. Since graduation Harry has been working in small interior design firm in Kansas City earning a salary of about $45,000.Belinda is 27, has a degree in business administration from a university on the West Coast, and has been employed in a medium-size manufacturing firm in California for about five years. Harry and Belinda both worked on their schools' student newspapers and met at a conference during their junior year in college.After all these years they met again socially in January in Kansas City, Missouri where Belinda was visiting relatives and by chance she and Harry were at the same museum. After getting reacquainted they started dating and in only a matter of months…
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