Your Perfect Assignment is Just a Click Away
We Write Custom Academic Papers 100% Original, Plagiarism Free, Customized to your instructions!
glass
pen
clip
papers
heaphones

BUSINESS QUESTION (2)

BUSINESS QUESTION (2)

Part 1:
At the end of Chapter 10, read Situation 1 and using the questions as a guide, discuss recommendations.
At the end of Chapter 12, read Situation 2 and using the questions as a guide, discuss recommendations.
NOTE: To receive full credit, post your initial response by Wednesday (250 words) and reply to at least two classmates by Sunday (minimum 100 words). Replies should be substantive and add to the discussion, going beyond a simple, “I agree.”
The Donahoo Western Furnishings Company was formed
on December 31, 2010, with $1,000,000 in equity plus
$500,000 in long-term debt. On January 1, 2011, all of the
fi rm’s capital was held in cash. The following transactions
occurred during January 2011.
• January 2: Donahoo purchased $1,000,000 worth of
furniture for resale. It paid $500,000 in cash and fi nanced
the balance using trade credit that required payment in
60 days.
• January 3: Donahoo sold $250,000 worth of furniture that
it had paid $200,000 to acquire. The entire sale was on
credit terms of net 90 days.
• January 15: Donahoo purchased more furniture for
$200,000. This time, it used trade credit for the entire
amount of the purchase, with credit terms of net
60 days.
• January 31: Donahoo sold $500,000 worth of furniture,
for which it had paid $400,000. The furniture was sold
for 10 percent cash down, with the remainder payable
in 90 days. In addition, the fi rm paid a cash dividend of
$100,000 to its stockholders and paid off $250,000 of its
long-term debt.
question 1 What did Donahoo’s balance sheet look like at
the outset of the fi rm’s life?
question 2 What did the fi rm’s balance sheet look like
after each transaction?
question 3 Ignoring taxes, determine how much income
Donahoo earned during January. Prepare an income
statement for the month. Recognize an interest expense
of 1 percent for the month (12 percent annually) on the
$500,000 long-term debt, which has not been paid but
is owed.
question 4 What was Donahoo’s cash fl ow for the month
of January?
sItuatIOn 1
David Bernstein needs help fi nancing his Lodi, New Jersey–
based Access Direct, Inc., a six-year-old $3.5 million company.
“We’re ready to get to the next level,” says Bernstein, “ but
we’re not sure which way to go.” Access Direct spruces up
and then sells used computer equipment for corporations.
It is looking for up to $2 million in order to expand. “Venture
capitalists, individual investors, or banks,” says Bernstein, who
owns the company with four partners, “we’ve thought about
them all.”
question 1 What is your impression of Bernstein’s
perspective on raising capital to “get to the next level”?
question 2 What advice would you off er Bernstein as to
both appropriate and inappropriate sources of fi nancing in
his situation?

Our Service Charter

1. Professional & Expert Writers: Elite Writers only hires the best. Our writers are specially selected and recruited, after which they undergo further training to perfect their skills for specialization purposes. Moreover, our writers are holders of masters and Ph.D. degrees. They have impressive academic records, besides being native English speakers.

2. Top Quality Papers: Our customers are always guaranteed of papers that exceed their expectations. All our writers have +5 years of experience. This implies that all papers are written by individuals who are experts in their fields. In addition, the quality team reviews all the papers before sending them to the customers.

3. Plagiarism-Free Papers: All papers provided by Elite Writers are written from scratch. Appropriate referencing and citation of key information are followed. Plagiarism checkers are used by the Quality assurance team and our editors just to double-check that there are no instances of plagiarism.

4. Timely Delivery: Time wasted is equivalent to a failed dedication and commitment. Elite Writers is known for timely delivery of any pending customer orders. Customers are well informed of the progress of their papers to ensure they keep track of what the writer is providing before the final draft is sent for grading.

5. Affordable Prices: Our prices are fairly structured to fit in all groups. Any customer willing to place their assignments with us can do so at very affordable prices. In addition, our customers enjoy regular discounts and bonuses.

6. 24/7 Customer Support: At Elite Writers, we have put in place a team of experts who answer to all customer inquiries promptly. The best part is the ever-availability of the team. Customers can make inquiries anytime.