Donahoo Western Furnishing Company Essay

1. What did Donahoos poise cerement aim like at the origin of the pisseds life? harmonise to the text, at the start of the business, all of the bulletproofs capital was held in cash. This is correspond by the $1,500,000 in cash rate of flow assets, which we can make up ones mind are comprised of a $500,000 semipermanent loan and $1,000,000 in equity.2. What did the firms balance sheet look like after each action?In the following balance sheet, we learn that cash has been trim by $500,000 that went towards the raw $1,000,000 in memorial. The remaining $500,000 was financed by a short-term payable.In the next balance sheet, we can see that inventory diminish by $200,000 but that accounts payable change magnitude by $250,000. Thus, retained earnings change magnitude 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 otherwise current assets increased $500,000 (with $50,0 00 going in to cash and $450,000 into A/R). Rather than contemptible the $100,000 to retained earnings, the high society used $100,000 in cash to pay a dividend. The smart set then took an additional $250,000 from cash and paid down long-term debt3. Ignoring taxes, determine how some(prenominal) income Donahoo earned during January. Prepare an income statement for the month. acknowledge an interest expense of 1 share 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 sandwich Furnishings Company. Therefore, we can see what the Net derive is before Operating Expenses. That is, this number is overstate and would likely be dramatically reduced once Operating Expenses were included. The graph on the right represents an illustration of what the furniture companys real next income faculty be (i.e. operatin g income was estimated, incorporating rent, utilities, salaries, etc.).