Survey of Accounting (Accounting I)
8th Edition
ISBN: 9781305961883
Author: Carl Warren
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 3, Problem 3.3.1C
To determine
Concept introduction:
Do-it-for-me and Do-it-yourself:
Do-it-for-me business means when the other entity take responsibility of handling the work for the company and the do-it-yourself business means when the company or the organisation provides the platform for the services direct to the customers.
To prepare:
The advantages of both do-it-for-me and do-it-yourself type of business and conclude which is the better emphasis to implement.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Scenario:
Karen and Yanique are opening a jewellery store with no competition in the area from which they intend to operate their business. Their fundamental decision is how to organize the business. They anticipate super profits the first year, with the ability to sell franchises in the future. Although they have enough to start the business now as a partnership, cash flow will be an issue as they grow and as such, they feel the corporate form of operation will be best for the long term. They seek your advice.Requirements:1. State three (3) of the main advantage they gain by selecting a corporate form of business now.2. Would you recommend they initially issue preferred or common stock? Why?3. If the corporation when formed sets a par value for its shares low and issue common stock for a price above par, what is this amount above par called? Can this amount be treated as a gain, income, or profit for the corporation? Please give the reason for your answer.
4. Assume one year later…
Scenario:
Catherine and Tariq are opening a jewellery store with no competition in the area from which they intend to operate their business. Their fundamental decision is how to organize the business. They anticipate super profits the first year, with the ability to sell franchises in the future. Although they have enough to start the business now as a partnership, cash flow will be an issue as they grow and as such, they feel the corporate form of operation will be best for the long term. They seek your advice.
Requirements:
Assume one year later (2019) the company CT Jeweller’s Ltd has been formed and the owners are desirous of companying several financial transactions and possible outcomes to assist in guiding their decision-making process. They have asked each student from your accounting course to prepare the company’s journal entries and statement of owner’s equity based on the following information:
The company’s charter authorizes 1,000,000 shares of common stock and…
You own a successful chocolate company and company and would like to expand your business and invest in an online candy company. You'vd found the perfect company, Online Confections of a Chocoholic. You have reviewed the 10-K report and financial statements. You are satisfied with this choice as an investment. Now, you much decide how much to invest in Online Confections of a Chocoholic. You have a choice to own as much as you want to invest.
Once you have decided how much you want ot own of Online Confections of a Chocoholic, go ahead and make the purchase. You'll now have to think about the jounral entries and disclosure statements for your new online-based business.
20% or less
20% to 50%
50% or more
Chapter 3 Solutions
Survey of Accounting (Accounting I)
Ch. 3 - Assume that a lawyer bills her clients $15000 on...Ch. 3 - On January 24, 20Y8, Niche Consulting collected...Ch. 3 - Prob. 3SEQCh. 3 - If the supplies account indicated a balance of...Ch. 3 - The balance in the unearned rent account for Jones...Ch. 3 - Would AT&T and Microsoft Use the cash basis or the...Ch. 3 - How are revenues and expenses reported on the...Ch. 3 - Fees for services provided are billed to a...Ch. 3 - Employees performed services in 20Y8, but the...Ch. 3 - Prob. 5CDQ
Ch. 3 - Is the Land balance before the accounts have been...Ch. 3 - Is the Supplies balance before the accounts have...Ch. 3 - Prob. 8CDQCh. 3 - Prob. 9CDQCh. 3 - Prob. 10CDQCh. 3 - If the effect of an adjustment is to increase the...Ch. 3 - Prob. 12CDQCh. 3 - (a) Explain the purpose of the accounts...Ch. 3 - Prob. 14CDQCh. 3 - Transactions using accrual accounting Terry Mason...Ch. 3 - Adjustment process Using the data from Exercise...Ch. 3 - Financial statements Using the data from Exercises...Ch. 3 - Prob. 3.4ECh. 3 - Accrual basis of accounting Margie Van Epps...Ch. 3 - Classify accruals and deferrals Classify the...Ch. 3 - Classify adjustments The following accounts were...Ch. 3 - Adjustment for supplies Answer each of the...Ch. 3 - Adjustment for prepaid insurance The prepaid...Ch. 3 - Adjustment for unearned fees The balance in the...Ch. 3 - Adjustment for unearned revenue For a recent year....Ch. 3 - Effect of omitting adjustment At the end of...Ch. 3 - Adjustment for accrued salaries Laguna Realty Co....Ch. 3 - Determine wages paid The balances of the two...Ch. 3 - Effect of omitting adjustment Accrued salaries of...Ch. 3 - Effect of omitting adjustment Assume that the...Ch. 3 - Effects of errors on financial statements For a...Ch. 3 - Effects of errors on financial statements The...Ch. 3 - Effects of errors on financial statements If the...Ch. 3 - Adjustment for accrued fees At the end of the...Ch. 3 - Adjustments for unearned and accrued fees The...Ch. 3 - Effect on financial statements of omitting...Ch. 3 - Adjustment for depreciation The estimated amount...Ch. 3 - Adjustments Clean Air Company is a consulting firm...Ch. 3 - Book value of fixed assets For a recent year....Ch. 3 - Classify assets Identify each of the following as...Ch. 3 - Balance sheet classification At the balance sheet...Ch. 3 - Classified balance sheet Pounds-Away Services Co....Ch. 3 - Prob. 3.29ECh. 3 - Balance sheet List any errors you can find in the...Ch. 3 - Accrual basis accounting San Mateo Health Care...Ch. 3 - Prob. 3.2PCh. 3 - Financial statements Data for San Mateo Health...Ch. 3 - Statement of cash flows Data for San Mateo Health...Ch. 3 - Statement of cash flows Data for San Mateo Health...Ch. 3 - Adjustments and errors At the end of May, the...Ch. 3 - Adjustment process and financial statements...Ch. 3 - Adjustment process and financial statements...Ch. 3 - Adjustment process and financial statements...Ch. 3 - Adjustment process and financial statements...Ch. 3 - Prob. 3.1MBACh. 3 - Prob. 3.2MBACh. 3 - Prob. 3.3MBACh. 3 - Prob. 3.4MBACh. 3 - Prob. 3.5.1MBACh. 3 - Prob. 3.5.2MBACh. 3 - Prob. 3.5.3MBACh. 3 - Prob. 3.5.4MBACh. 3 - Quick ratio The Gap Inc. (GPS)operates specialty...Ch. 3 - Prob. 3.6.2MBACh. 3 - Quick ratio The Gap Inc. (GPs)operates specialty...Ch. 3 - Quick ratio American Eagle Outfitters Inc. (AEO)...Ch. 3 - Quick ratio American Eagle Outfitters Inc. (AEO)...Ch. 3 - Prob. 3.7.3MBACh. 3 - Prob. 3.8MBACh. 3 - Prob. 3.9.1MBACh. 3 - Prob. 3.9.2MBACh. 3 - Prob. 3.9.3MBACh. 3 - Prob. 3.1CCh. 3 - Adjustments for financial statements Several years...Ch. 3 - Prob. 3.3.1CCh. 3 - Prob. 3.3.2CCh. 3 - Prob. 3.4.1CCh. 3 - Prob. 3.4.2CCh. 3 - Accrual versus cash net income. Cigna Corp. (CI)...Ch. 3 - Prob. 3.5.1CCh. 3 - Prob. 3.5.2C
Knowledge Booster
Similar questions
- Roald is the sales manager for a small regional manufacturing firm you own. You have asked him to put together a plan for expanding into nearby markets. You know that Roalds previous job had him working closely with many of your competitors in this new market, and you believe he will be able to facilitate the company expansion. He is to prepare a presentation to you and your partners outlining his strategy for taking the company into this expanded market. The day before the presentation, Roald comes to you and explains that he will not be making a presentation on market expansion but instead wants to discuss several ways he believes the company can reduce both fixed and variable costs. Why would Roald want to focus on reducing costs rather than on expanding into a new market?arrow_forwardA country club wants to exam the effects of a new marketing campaign that attempts to get more people within the community to become members. In many communities, when people buy a house in the area, they receive a “Welcome Wagon” gift basket containing coupons to local restaurants. The idea of the marketing campaign is to include a free two month membership to the country club in the gift basket with the hope that once “new” residents try the country club then at least a certain proportion will want to become real members. One member of the Club’s Executive Council believes that at least 81% of the people who receive the coupons for the free membership will use the coupon. In a sample of 192 new residents who received the coupon for the two month free membership, there were 138 people who actually took advantage of the free two month membership. When testing the hypothesis that at least 81% of the people that receive the coupon actually use it, what is the test statistic?arrow_forwardFirst image is with the answers that are given and the questions scenarios . Second image is with more question scenarios . I need help and explanations on what answer to match with what scenarios .It’s about the best way for funding business in the given scenarioarrow_forward
- Question: What is the project NPV? You have determined in your mind that you would like to have a businessof your own, although your father runs a family restaurant in yourlocal city. You have therefore, decided to have a medium size snackand cocktails bar which will accommodate the cruise ship passengerswho visit your city. You plan to keep the business for five yearsafter which you will sell it off to your brother John for $2,000,000and go off to do your Master’s Degree in the UK. Though you will beoccupying the establishment from your grandmother for free, you havedecided that you need to make some improvements to the property whichwill cost you $1,500,000. Additionally, you will spend $275,000 inbar stools, tables and decorations. If this space had been leased out,it would have fetched a lease rental of $75,000 per year. You willdepreciate the assets over 7 years using MACRS. You have determinedthat you would need an average cash balance of $15,000 and inventoryof $20,000 while…arrow_forwardUsing the information in the below paragraph, what is the expected Customer Lifetime Value (CLV) of Eugenia Garcia to Autobarn City Mazda? Eugenia Garcia is a DePaul Driehaus College of Business student majoring in Marketing with a concentration in Sales Leadership. Eugenia graduates at the end of this quarter. Following a successful internship, the previous summer, Eugenia has accepted a full-time job offer with Microsoft in the role of Associate Sales Representative with a starting annual salary of $79,500. Additionally, Eugenia will receive $500 monthly ($6,000 total annually) as a car allowance plus 72 cents per mile traveled for work given the need for Eugenia to visit customers in person across her sales territory in the Chicago metro area. Eugenia's new job starts two weeks following graduation during the same week Eugenia celebrates her 23rd birthday with family and friends. Like most urban college students, Eugenia has not owned a car while attending DePaul. Instead, she has…arrow_forwardCOFFEE CALL SEEKS FUNDS FOR EXPANSION Coffee Call is a small, independent coffee shop. It is run by two brothers Erin and Carl Shutter. They are keen to increase sales by using the shop space more effectively and install three new tables. This will, however, require a significant investment and the sisters have approached the bank with a business plan for the expansion with the aim of securing loan finance. The Brothers have been approached by a venture capitalist who is willing to fund the expansion in return for a 20% stake in Coffee Call. The sisters are concerned to keep the liquidity of the business secure during the expansion. The following cash flow data have been produced by Coffee Call’s accountant for the period January to June: - Sales for the first three months of the year will be $20,000, rising to $40,000 in the following three months once Coffee Call has installed the extra seating. - Material costs are 50% of sales and are paid each month. - Electricity and…arrow_forward
- Jacks Apps Company researches, develops, and sells traditional applications (i.e., apps) for middle-aged mobile phone device users. In an attempt to tap into the large young adult app market to boost sales and advertising revenues. Jacks CFO, Daniel, is considering hiring students from area high schools and universities to drastically increase the innovativeness of the companys apps. Specifically, Daniel hopes that Jacks new student employee pool will make Jack's next wave of phone apps inventions popular with young adults by providing innovative services, such as exchanging payments for late-night food deliveries, arranging informal dating and other social gatherings, exchanging perspectives on different professors, and identifying unusual debit card purchase patterns to assist with early fraud detection notification. Based on cost estimates from Jacks finance team and surveys of its new target customers (i.e., New Customer Financial Survey), Daniel estimates that this new customer market would increase Jacks annual net income by 10,000,000. In addition to the New Customer Financial Survey. Jacks management team conducted a Business Sustainability Analysis. Specifically, the stakeholder engagement portion of the Business Sustainability Analysis revealed that four of Jacks most important stakeholder groups (advertisers, regulators, employees, and customers) would react stronglysome favorably and others unfavorablyto the decision to push its app business in the direction of the young adult market. Specifically, ten percent of its existing advertisers would drop Jacks as a client, thereby reducing its annual advertising revenue of 10,000,000. Also, confidential discussions with competitors suggest that the new fraud detection app would require sensitive customer information that Jacks would be unable to protect perfectly from data hackers, thereby resulting in annual fines of 1,500,000 from regulators. In addition, employee engagement meetings indicated that they would strongly favor the expansion into the young adult market. Daniel estimates that improved employee morale would significantly increase their productivity and creativity, thereby increasing annual sales revenue by 2,000,000. Finally, focus groups with existing customers revealed that they would highly value the increased workforce diversity of Jacks hiring a large number of talented young female employees with an expertise in technology. Daniel estimates that this positive customer sentiment would translate into an additional 3,000,000 in annual traditional apps sales. Required: 1. Using the New Customer Financial Survey and the Business Sustainability Analysis calculate the net change in Jacks Apps Companys net income that would be expected from pursuing the young adult app market. 2. Based on the calculation in Requirement 1, should Jacks Apps pursue the young adult app market? Explain your answer. 3. CONCEPTUAL CONNECTION Describe two additional considerations that Jacks Apps Company management might be wise to consider before making a final decision on whether or not to pursue the young adult apps market.arrow_forwardmagine yourself in the position of Thomas Pierce III, president of Greymare Bus Lines. Your firm was established by your grandfather, who was quick to capitalize on the growing demand for transportation between Widdicombe and nearby townships. The company has owned all its vehicles from the time the company was formed; you are now reconsidering that policy. Your operating manager wants to buy a new bus costing $83,000. The bus will last only eight years before going to the scrap yard. You are convinced that investment in the additional equipment is worthwhile. However, the representative of the bus manufacturer has pointed out that her firm would also be willing to lease the bus to you for eight annual payments of $15,200 each. Greymare would remain responsible for all maintenance, insurance, and operating expenses. If Greymare does not own the bus it cannot depreciate it and therefore, it gives up a valuable depreciation tax shield. We assume depreciation would be calculated…arrow_forwardScenario: You're a savvy entrepreneur that wants to open an ice cream shop downtown near the college campus. However, you remember your lesson on financial planning and decide it's a good idea to project cash flows for your business before investing your time and money in the operation. Your objective is break-even on a cash basis within 3 years of opening shop - Otherwise, the business opportunity is not worth your time. You make the following assumptions and notes: Each ice cream cone is sold for ₱25 and costs ₱25 to make in materials. You plan on selling 10,000 cones in year 1, 15,000 cones in year 2, and 25,000 cones in year 3. Sales projections after year 3 are difficult to make, but you know that they will not be lower than 25,000 cones per year. Your lease for the business location is ₱125,000 annually, and your lease for the ice cream equipment is ₱62,500 annually. You plan on hiring part-time staff to help you during peak season. You assume that this would cost ₱62,500…arrow_forward
- If your friend asks you to invest into his two year old restaurant as a partner, which is expanding and needs money to open a second restaurant in another location, will you agree? What factors will you consider in making the decision? Will your answer be different if he asks you to personally loan him the money that he will in turn invest into the business? Why or why not?arrow_forwardYou are considering entering the shoe business. You believe that you have a narrow window for entering this market. Because of Christmas demand, the time is right today, and you believe that exactly a year from now would also be a good opportunity. Other than these two windows, you do not think another opportunity will exist to break into this business. It will cost you $35 million to enter the market. Because other shoe manufacturers exist and are public companies, you can construct a perfectly comparable company. Hence, you want to use the Black-Scholes formula to decide when and if you should enter the shoe business. Your analysis implies that the current value of your shoe company would be $40 million, and that the volatility is 25% per year. Of the $40 million current value, $6 million is coming from the free cash flows expected in the first year. The risk-free rate is 4%. What is the value of the investment opportunity if you choose to wait? (Hint: think of the investment as a…arrow_forwardWHICH WILL IT BE? Georgia Isaacson and her son Rubin have been thinking about buying a business. After talking to seven entrepreneurs, all of whom have expressed an interest in selling their operations, the Isaacsons have decided to make an offer for a retail clothing store. The store is very well located, and its earnings over the past five years have been excellent. The current owner has told the Isaacsons he will sell for $500,000. The owner arrived at this value by projecting the earnings of the operation for the next seven years and then using a discount factor of 15 percent. The Isaacsons are not sure the retail store is worth $500,000, but they do understand the method the owner used for arriving at this figure. Georgia feels that since the owner has been in business for only seven years, it is unrealistic to discount seven years of future earnings. A five-year estimate would be more realistic, in her opinion. Rubin feels that the discount factor is too low. He believes that 20…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
- Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage LearningCornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning