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Introduction of Jeremy¡¯s venture:
Jeremy set up a six weeks venture, which is from June to July. ...
Constrains, Factors and Objectives:
Jeremy¡¯s company is a sole proprietorship, it does not have to dollow the General Accepted Accounting Principles (GAAP). ... Jeremy have borrowed money from a bank. ... Jeremy and the account are also the user of the income statement and balance sheet. ... The banker want to see that jeremy¡¯s company has a high current ratio and low debt-to-equity ratio as well as have enough cash to pay back the loan and interest. Jeremy wants to see that he has high net income. ...
Jeremy¡¯s company is based on sale souvenirs. ...
Accounting Choices and Problems:
Jeremy presented his designs, which cost $1,200, to the Festival organization committee and paid $2,000 licensing fee that allow him to legally sell the souvenirs. ... Even thought jeremy can use it for future or in next festival, it cannot record to as the current ratio. ... However, if I record it as expense, the net income will be lower at the end, which is good to fulfill Jeremy¡¯s tax minization objective. ... The calculation as below:
1000
5
2400
30000
The bank loan has benefited Jeremy. ... I know from the following information that Jeremy already sold some souvenirs. ... it is about 4 months from jeremy borrowed the money until July 3rd, 2005. ...
I do not know whether Jeremy signed a contract or agreement with the bank or not? ... What if jeremy could not pay the money back, what could the bank take rather than the souvenirs? ... I assum that the bank require jeremy keep the current ratio between 1. ... It might be the reason that Jeremy get the loan.
In May, Jeremy digned a contract with the producer to produce 5000 souvenirs at the cost of $10 each. ... The 5000 souvenirs were Jeremy¡¯s inventory, because his venture was based on the selling souvenirs. ...
The old van that Jeremy purchased for transport the souvenirs that I treated as the asset, because the going-concern assumtion does not apply to his business. ... I assume that Jeremy will sell the van at the end of the festival, because it is an old van. ... It might have many opportunities for him to continue his venture in the city, because there are a lot of tourists visit canada each year. ... If his venture is very successful, he migh develop a team make this venture bigger. Therefore, his venture will be treated as a going concern business. ...
Jeremy hired a number of vendors to sell the souvenirs. ... Vonders will sell souvenirs as $19 and keep $5 for each ofthem that they sold, so the revenue for Jeremy will be $14 for each souvenir. As we know the cost for producing the souvenirs is $10, so the cost margin is $4 for each souvenir, which is the really value that Jeremy earned from selling each of the souvenir. ... In the first method, the $28,000 was what Jeremy got, so it was more conservative than the last method. ...
However, I have to consider the agreement between the vendors and Jeremy. I do not know when will the vendor give the money that they sold to Jeremy. ... I assum that the vendors agreed to give the money to Jeremy after they sold every 1,000 souvenirs, so Jeremy will be sure that his account receivable will not be high. The bankers will not see that Jeremy has too much uncollect money. On the other hand, if the vendors can give the money back to Jeremy at the end of the festival, the current ratio for this income statement will be lower, the banker might suspches from the high large amount of account receivable. ... I do not know does Jeremy have a office or not? ... After I issued the loan, I have to monitor my customer¡¯s financial situation.
Approximate Word count = 3216
Approximate Pages = 12.9
(250 words per page double spaced)
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