Donahoo Western Furnishing Company Essay

1. What did Donahoos balance sheet look wish well at the outset of the firms life?According to the text, at the start of the business, all of the firms capital was held in cash. This is represented by the $1,500,000 in cash current assets, which we provide see are comprised of a $500,000 long-term loan and $1,000,000 in equity.2. What did the firms balance sheet look like after each transaction?In the following balance sheet, we see that cash has been reduced by $500,000 that went towards the new $1,000,000 in neckcloth. The remaining $500,000 was financed by a short-term payable.In the conterminous balance sheet, we can see that inventory decreased by $200,000 but that accounts payable increased by $250,000. Thus, retained profits increased by $50,000.On Jan. 15, Donahoo increased inventory by $200,000 adding this value to short-term liabilitiesHere, we see inventory decrease $400,000 but other current assets increased $500,000 (with $50,000 going in to cash and $450,000 into A/R). preferably than moving the $100,000 to retained earnings, the company used $100,000 in cash to pay a dividend. The company past took an additional $250,000 from cash and paid down long-term debt3. Ignoring taxes, determine how much income Donahoo earned during January. Prepare an income narration 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.Unfortunately, the data that is provided does not include the operating expenses for January 2011 for the Donahoo Western Furnishings Company. Therefore, we can see what the make Profit is before Operating Expenses. That is, this number is overstated and would likely be dramatically reduced formerly Operating Expenses were included. The graph on the right represents an illustration of what the furniture companys real next income might be (i.e. operating income was estimated, incorporating rent, utilities, salaries, etc.) .