Scribd Logo
Upload

Welcome to Scribd!

  • 43 views

    Business Case

    Uploaded by

    Mark Faderguya
    Lucy and Nick Lars opened a driving range on March 1, 2014, investing $800,000. Their expenses for the first month were $90,000 and their withdrawals were $32,000. On March 31, their bank balance was $604,000. Lucy and Nick estimated profits ranging from a $196,000 loss to $66,000 in net income. However, neither estimate was valid - the $196,000 loss did not account for depreciation or revenue, and the $66,000 profit did not include $32,000 in equipment. By preparing a proper balance sheet and income statement, their actual net income for March was determined to be $98,000 based on $188,

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Business Case

    Uploaded by

    Mark Faderguya
    43 views3 pages
    Lucy and Nick Lars opened a driving range on March 1, 2014, investing $800,000. Their expenses for the first month were $90,000 and their withdrawals were $32,000. On March 31, their bank balance was $604,000. Lucy and Nick estimated profits ranging from a $196,000 loss to $66,000 in net income. However, neither estimate was valid - the $196,000 loss did not account for depreciation or revenue, and the $66,000 profit did not include $32,000 in equipment. By preparing a proper balance sheet and income statement, their actual net income for March was determined to be $98,000 based on $188,

    Original Description:

    awe

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Lucy and Nick Lars opened a driving range on March 1, 2014, investing $800,000. Their expenses for the first month were $90,000 and their withdrawals were $32,000. On March 31, their bank balance was $604,000. Lucy and Nick estimated profits ranging from a $196,000 loss to $66,000 in net income. However, neither estimate was valid - the $196,000 loss did not account for depreciation or revenue, and the $66,000 profit did not include $32,000 in equipment. By preparing a proper balance sheet and income statement, their actual net income for March was determined to be $98,000 based on $188,

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    43 views3 pages

    Business Case

    Uploaded by

    Mark Faderguya
    Lucy and Nick Lars opened a driving range on March 1, 2014, investing $800,000. Their expenses for the first month were $90,000 and their withdrawals were $32,000. On March 31, their bank balance was $604,000. Lucy and Nick estimated profits ranging from a $196,000 loss to $66,000 in net income. However, neither estimate was valid - the $196,000 loss did not account for depreciation or revenue, and the $66,000 profit did not include $32,000 in equipment. By preparing a proper balance sheet and income statement, their actual net income for March was determined to be $98,000 based on $188,

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    You are on page 1of 3

    CHIP-SHOT DRIVING RANGE

    A business case
    presented to the
    Accountancy Department

    In Partial fulfillment
    of the course requirements
    in ACCTBA1

    Damian, RJ
    De Leon, Gerard
    Faderguya, Mark
    Lopez, Maria Ayessa

    Section K40
    December 8, 2014
    I. Introduction
    Lucy and Nick Lars, opened a driving range on March 1, 2014 investing P800,000 of their cash
    savings in the business. Their expenses for the first month of operations amounted to P90,000.
    Lucy and Nick also had withdrawals(32,000) for their living expenses. On March 31, the balance
    in the companys bank account was P604,000. Lucy and Nick thought they had a pretty good
    first month of operations. But their estimates of profitability ranged from a loss of P 196,000 to
    net income of P66,000.

    II. Discussion
    1. How could the Lars have concluded that the business operated at a loss of P 196,000?
    Was this a valid basis on which to determine net income?

    Lars deducted his companys remaining cash of 604,000 to their initial investment of 800,000 to
    get 196,000 as his estimated loss.

    2. How could the Lars have concluded that the business operated at a net income of
    P66,000? (Hint: Prepare a balance sheet at March 31.) Was this a valid basis on which to
    determine net income?
    Lars concluded a net income of P66,000 he did not add the golf balls and equipment amounting
    to P32,000 to his property, plant and equipment. This is not a valid basis to determine net
    income. There is also no depreciation in their Property, Plant and Equipment.

    Lars Chip-Shot Driving Range


    Statement of Financial Position
    March 31, 2014
    Current Assets
    Cash P604,000
    Non-Current Assets
    Property Plant and Equipment 240,000
    Total Assets 844,000

    Current Liabilities P 10,000


    Owners Equity 768,000

    Net Income 66,000


    844,000
    3. Without preparing an income statement, determine the actual net income for March?

    Total Assets 876,000


    Total Liability (10,000)
    Total Equity (768,000)
    Retained Earnings P98,000

    4. What was the revenue earned in March?


    The revenue for the month of march amounted to P 188,000.
    Net Income P98,000
    Add: Expenses 90,000
    Revenue P 188,000

    You might also like