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need_2cash_budgets

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SCHOOL OF HOSPITALITY, TOURISM AND CULINARY ARTS
BACHELOR OF INTERNATIONAL HOSPITALITY MANAGEMENT (HONS)
HTM 2453 – MANAGEMENT ACCOUNTING
BH 6
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CASE STUDY 4
Each autumn, as a hobby, Anne Magnuson weaves cotton place mats to sell through a local
creaft shop. The mats sell for $20 per set of four. The shop charges a 10% commission and
remits the net proceeds to Magnuson at the end of December. Magnuson has woven and sold
25 sets each of the last two years. She has enough cotton in inventory to make another 25
sets. She paid $7 per set for the cotton. Magnuson uses a four-harness loom that she
purchased for cash exactly two years ago. It is depreciated at the rate of $10 per month. The
accounts payable relate to the cotton inventory and are payable by September 30.
Magnuson is considering buying an eight-harness loom so that she can weave more intricate
patterns in linen. The new loom costs $1,000; it would be depreciated at $20 per month. Her
bank has agreed to lend her $1,000 at 18% interest, with $200 principal plus accrued interest
payable each December 31. Magnuson believes she can weave 15 linen place mat sets in
time for the Christmas rush if she does not weave any cotton mats. She predicts that each
linen set will sell for $50. Linen costs $18 per set. Magnuson’s suppliers will sell her linen
on credit, payable on December 31.
Magnuson plans to keep her old loom whether or not she buys the new loom. The balance
sheet for her weaving business at August 31, 2011, is as follows:
ANNE MAGNUSON, WEAVER
Balance Sheet
August 31,2011
Current assets: $ Current liabilities: $
Cash 25
Accounts
payable 74
Inventory of cotton 175
200
Fixed assets:
Loom 500 Stockholders' equity 386
Acumulated
depreciation -240
260
$460 $460

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https://www.studypool.com/discuss/299469/need-2cash-budgets-completed SCHOOL OF HOSPITALITY, TOURISM AND CULINARY ARTS BACHELOR OF INTERNATIONAL HOSPITALITY MANAGEMENT (HONS) HTM 2453 - MANAGEMENT ACCOUNTING BH 6 CASE STUDIES 4 (30%) GROUP MEMBERS NAME STUDENT ID NUMBER GROUPING Jesica Silviani 0310857 3 Silvia Chandra 0311317 3 Tong Xiu Lyn 0307613 3 Vinny Priscillia Lim 0307829 3 Zhang Kuo 0306181 3 Li Xiang Christina 2 CASE STUDY 4 Each autumn, as a hobby, Anne Magnuson weaves cotton place mats to sell through a local creaft shop. The mats sell for $20 per set of four. The shop charges a 10% commission and remits the net proceeds to Magnuson at the end of December. Magnuson has woven and sold 25 sets each of the last two years. She has enough cotton in inventory to make another 25 sets. She paid $7 per set for the cotton. Magnuson uses a four-harness loom that she purchased for cash exactly two years ago. It is depreciated at the rate of $10 per month. The accounts payable relate to the cotton inventory and are payable by September 30. Magnuson is considering buying an eight-harness loom so that she can weave more intricate patterns in linen. The new loom costs $1,000; it would be depreciated at $20 per month. Her bank has agreed to lend her $1,000 at 18% interest, with $200 principal plus accrued interest payable each December 31. Magnuson believes she can weave 15 linen place mat sets in time for the Christmas rush if she does not weave any cotton mat ...
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