business to his son, Jim Reed II. In 1981, Jim decided to expand retail floor space and acquired an $880,000 long-term mortgage debt. During this time, Jim increased inventories with the belief that higher inventories led to higher sales. In 1994, the business had grown to more than $2 million in sales. The increased inventories, along with the acquired mortgage payments have seriously eroded Reed’s positive cash flow. During the last year, Reed had slowly increased his line of credit at the
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payment of $130,000, which needed to be paid within a month. Reed had made a choice to safe the business, by taking the cash in reserves in the amount of $85,000 and cash inventory in the amount of $491,000. Reed was determined to meet the financial obligation of the business, so he decides to covert a portion of the inventory into cash. Financial ratio analysis will provide the financial standing of the past, present, and future of the company to determine the best way to restore financial standing
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warehousing design as cross-docking is more desirable by allowing more receiving and outgoing delivery doors, or a bigger floor space to handle more product movements. 6. The advantages of private warehousing are: cost is spread over more units of inventory, more control over storage needs, control over product placement within the facility, and access to product whenever the company needs. A few disadvantages are: initial cost is very high, fluctuating demand means loss of productive space, high interest
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Hampton Machine Tool Company On September 14, 1979, Mr. Jerry Eckwood, vice president of the St. Louis National Bank was considering a loan request from a customer located in a nearby city. The company, Hampton Machine Too] Company, had requested renewal of an existing $1 million loan originally due to be repaid on September 30. In addition to the renewal of the existin- loan, Hampton was asking for an additional loan of $350,000 for planned equipment purchases in October. Under the terms
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For Gilbert La Crosse, there is nothing quite as beautiful as a handcrafted wood-framed window. La Crosse’s passion for windows goes back to his youth in Eau Claire, Wisconsin, where he learned from an elderly carpenter how to make residential windows. He learned about the characteristics of good wood, the best tools to use, and how to choose the best glass from local suppliers. La Crosse apprenticed with the carpenter in his small workshop, and when the carpenter retired, he was given the opportunity
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the following questions. ____ 1. When a customer returns goods for credit, the seller should a. credit Accounts Payable. b. credit Accounts Payable. c. debit Accounts Receivable. d. credit Merchandise Inventory ____ 2. Credit terms of 3/10, n/30 mean that a(n) a. 10% cash discount may be taken if payment is made immediately; a 3% discount if paid within 30 days. b. 3% cash discount may be taken if payment is made within 10
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Lawrence Sports Problem Solution University of Phoenix MBA-550 January 19, 2008 Liquidity must become a primary focus for any business hoping to create sustainable growth. Lawrence Sports, a fictional company, is presently in need of capital management analysis and methodology overhaul. Included in this paper is a discussion of the issues, opportunities, values and solutions that the firm should be considering. The 9 step problem solution model is the format used to take the reader through
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MANAGEMENT ACCOUNTING MULTIPLE CHOICE PRACTICE QUESTIONS FOR TOPIC 1 72. Both direct materials and indirect materials are a. period costs. b. merchandise inventory. c. raw materials. d. manufacturing overhead. 73. Into which one of the following accounts would the work of factory employees that can be physically and directly associated with converting raw materials into finished goods be categorized? a. Direct labor b. Indirect labor c. Manufacturing overhead
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consequences while the statement of cash flows reports the cash-basis consequences of the operating activities Exercise 13-19 a. Total units sold = 70 + 60 + 60 = 190 Total units in ending inventory = 60 FIFO ending inventory = (60 × 15) = $900 FIFO cost of goods sold = $2,500 b. LIFO ending inventory = 60 × 12 = $720 LIFO cost of goods sold = $2,680 c. Total cost of goods available for sale = 1,200 + 700 + 1,500 =
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people, and gives it the opportunity to take advantage of market conditions. The two other measurements of liquidity are very important to a business manager and/or owner. And one relates to the accounts receivable and the other relates to the inventory. And there
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