The Financial Journey of Winter Carnival Co. in 2015

1. How did Winter Carnival Co. start its business in 2015 and what were the initial financial balances?

Winter Carnival Co. started a business specializing in merchandise for winter activities such as ice-fishing, snow-sliding, and treasure-hunting in 2015. The company had the following beginning balances: - Accounts receivable $30,000 - Allowance for doubtful accounts $1,500 - Cash $10,000 - Inventory $200,000 - Prepaid advertisement $48,000 - Salary payable $6,500 - Accounts payable $50,000 - Accumulated depreciation – machine $90,000 - Common stock $100,000 - Machine $120,000 - Retained earnings $160,000

Winter Carnival Co.'s Business Start and Initial Balances

Winter Carnival Co. was founded in 2015 by the Queen of the Snows as a company specializing in merchandise for various winter activities. The company's initial financial balances included accounts receivable of $30,000, allowance for doubtful accounts of $1,500, cash reserves of $10,000, inventory valued at $200,000, prepaid advertisement expenses of $48,000, outstanding salary payable of $6,500, accounts payable totaling $50,000, accumulated depreciation on machinery amounting to $90,000, common stock of $100,000, a machine with a book value of $120,000, and retained earnings at $160,000. This strong financial foundation allowed Winter Carnival Co. to establish itself in the market and begin operations effectively. The initial balances provided the necessary resources and capital to support the company's growth and success in the winter merchandise industry.

2. What were the key transactions of Winter Carnival Co. in 2015 and how did they impact the company's financial position?

During 2015, Winter Carnival Co. engaged in various transactions, including acquisitions, sales, collections, borrowings, and expenses. These transactions had significant implications for the company's financial position and performance.

Key Transactions of Winter Carnival Co. in 2015

Winter Carnival Co. undertook several key transactions in 2015 that influenced its financial position and operations: 1. Acquisition of additional merchandise totaling $70,000, of which $20,000 was purchased on credit. 2. Delivery of merchandise and sales revenue earning of $350,000, with $200,000 on credit and $170,000 cost. 3. Collection of $180,000 on accounts receivable. 4. Borrowing $100,000 from a local bank on a 6% note for 5 years. 5. Signing a sales contract with Mini-Soda Company for $90,000 merchandise in January 2016, collecting $9,000 in advance. 6. Payment of $60,000 on accounts payable to suppliers. 7. Incurring $5,000 insurance expenses paid in cash. 8. Payment of $80,000 in salaries to employees and $5,500 salary payable remaining.

Overall, these transactions impacted Winter Carnival Co.'s financial position by inflows and outflows of cash, changes in assets and liabilities, and initiating obligations for future payments and deliveries. Each transaction played a role in shaping the company's financial health and performance during 2015.

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